LONDON: Coffee futures on ICE hit 2-1/2 week lows on Wednesday as supply prospects improved and the Brazilian real currency remained weak overall after this weekend’s surprise election result.
A weak real encourages mills, farmers and exporters in top sugar and coffee grower Brazil to sell dollar-priced commodity futures because it raises their returns in local currency terms.
COFFEE
ICE arabica coffee futures fell 2.6 percent to USD2.8605 per lb at 1243 GMT, having hit their lowest in 2-1/2 weeks at USD2.8515. Dealers said the weak real continues to weigh on coffee, as the currency has not recovered much from Monday’s 9 percent fall in the wake of President Luiz Inacio Lula da Silva’s election win.
Also, the weather in Brazil remains favourable for arabica, with above-normal moisture forecast across the main growing regions, said broker and consultant Michael J Nugent.
Elsewhere, there are signs that the relentless drawdown in ICE-certified stocks might be moderating somewhat, with data showing just over 36,000 bags of coffee have arrived at exchange warehouses and are awaiting grading.
Robusta coffee dipped 0.2 percent to USD3,214 a metric ton, having hit its lowest since March 2024 on Monday. Robusta is under pressure overall as the harvest gets under way in top grower Vietnam and exchange stocks continue to rise.
SUGAR
Raw sugar rose 0.7 percent to 19.34 cents per lb, recovering somewhat after Monday’s 5.6 percent Brazil currency-driven sell-off. “The (Brazil) currency move does not take away from the tightening supply outlook with poor crops in Europe, India and Brazil this year,” said broker ADMIS.
White sugar rose 0.6 percent to USD522.40 a metric ton,
COCOA London cocoa fell 1percent to £4,299 per ton. New York cocoa fell 1.3 percent to USD5,504 a ton.