Robusta coffee futures firmed on Thursday, with the focus on a wide premium between the two nearby contracts, while arabica coffee extended losses for a seventh straight day and temporarily fell below $2 per lb. ICE cocoa moved higher, with the market extending its inversion after a 5 percent rally on Wednesday on concerns over slow West African arrivals. ICE sugar firmed in rangebound dealings.
Robusta coffee futures rose, with dealers expecting the higher price to encourage cash sales from top producer Vietnam. "I think the balance will shift to the sellers, and we will see downside momentum moving forward," said Keith Flury, a senior analyst with Rabobank.
The March contract widened and later eased to close at a $128 per tonne premium over May, compared with a premium of $169 per tonne at the close on Wednesday. One market participant has built a long position on March robusta that could equate to a delivery of a large chunk of the certified coffee available and exceed proposed delivery limits due to be enforced by the exchange later in the year, traders said.
May robusta coffee on Liffe closed up $60, or 3 percent, at $2,039 a tonne. Farmers in main robusta producer Vietnam started to offer more beans this week because of rallies in London futures, while roasters asked for cheaper premiums for Indonesian coffee as the harvest progresses, dealers said.
May closed down 1.35 cents, or 0.7 percent, at $2.0120 per lb, the weakest settlement for the second position since November 2010. Earlier, it breached support at $2, dropping to $1.9780. The premium of the spot arabica contract over robusta fell to around 98 cents per lb, the lowest since October 2010. NYSE Liffe stepped up its drive to tighten regulation of its cocoa, robusta coffee, white sugar and feed wheat contracts on Thursday, to echo the stricter regime on the New York-based Intercontinental Exchange (ICE).
Cocoa futures on ICE turned higher, with May closing up $14 at $2,405 a tonne. March closed at a $48 premium to May. Liffe May cocoa futures closed down 12 pounds at 1,543 pounds a tonne. London May white sugar futures rose $10.30, or 1.7 percent, to settle at $627.00 per tonne in thin turnover of 2,287 lots. The state-run Thai Cane and Sugar Corp (TCSC) will open a tender to sell 67,333 tonnes of raw sugar from the next 2012/13 crop next week, a senior TCSC official said on Wednesday.