LONDON: Arabica futures on ICE hit six-week lows on Wednesday as supply prospects continue to improve, while cocoa and sugar bounced off four-month and five-week lows, respectively.
COFFEE
Arabica coffee fell 1.2 percent to USD2.6270 per lb at 1405 GMT, having hit a six-week low of USD2.6215 earlier. “Sentiment regarding an incoming flood of Brazilian coffees continues to weigh on the market.
Crop conditions for 27/28 continue to look good, relieving fears about worse-case drought scenarios caused by El Nino,” said trader Sucafina in a note.
While drought and heat have clearly harmed central America’s crop, which is currently being harvested, “the story is largely about (top grower) Brazil for now”, it said.
Arabica coffee pending grading and certification at ICE exchange warehouses rose to more than 100,000 bags on Tuesday, while certified stocks crept up above 241,000 bags, their highest since mid-October.
Robusta coffee fell 0.6 percent to USD3,233 a ton, hovering just above last week’s 2-1/2-year low of USD3,140.
COCOA
London cocoa rose 2.9 percent to £3,875 a ton, after hitting a four-month low of £3,675 on Tuesday.
An exceptionally strong El Nino could cut top grower Ivory Coast’s 2026/27 season cocoa production by 21 percent-25 percent, according to a report from the country’s national weather agency. For now though, “the buildup in exchange stocks over the past several months suggests that supply is outstripping demand”, noted broker ADMIS.
It said, however, El Nino remains a risk, and that soil conditions in West Africa are expected to dry up over the next week to 10 days.
New York cocoa rose 3.2 percent to USD4,893 a ton, after setting a four-month low of USD4,764 on Tuesday.
SUGAR
Raw sugar rose 1.1 percent to 18.29 cents per lb, after setting a five-week low of 17.92 cents on Tuesday. “The lower trend in energy prices this week undermines sugar on ideas it reduces the incentive to crush cane for ethanol,” said ADMIS. It said, however, top grower Brazil’s sugar production is down sharply this year due to too much rains, which persist may bring an early end to the harvest. White sugar rose 1.3 percent to USD511.50 a ton.