Arabica coffee futures on ICE fell on Wednesday as rains in key growing regions in Brazil provided a boost to prospects for the 2015/16 crop in the world's top grower. Cocoa prices were higher as Olam projected a global deficit in the 2014/15 season, while sugar edged up.
Rains that began falling this week over Brazil's main coffee and sugar cane belt will intensify over the next 10 days, especially on farms in the coffee-rich areas of western Minas Gerais state, forecasters said on Wednesday. Drought earlier this year dimmed the outlook for Brazil's 2015/16 crop although there is unlikely to be much clarity until early next year.
"Until anyone gets any more concrete ideas about how much the crop has been compromised (by earlier dry weather) the market will just trade on weather because that is the only certainty at the moment," said Andrea Thompson, analyst with CoffeeNetwork, part of INTL FCStone. March arabica coffee futures on ICE were off 1.1 cents or 0.6 percent at $1.9395 per lb by 1613 GMT.
Robusta coffee futures were slightly higher with the market continuing to derive support from strong demand due partly to the current large discount to arabica prices. January robusta coffee were up $8 at $2,103 a tonne. "Given the arbitrage between the two, there is no reason to think robusta demand growth won't continue to be as strong as it has been and that is going to continue to underpin robusta prices," Thompson said.
Cocoa futures were higher with March New York up $45 or 1.6 percent at $2,869 a tonne. Dealers noted commodities trader Olam was forecast a global cocoa deficit of more than 120,000 tonnes for 2014/15 driven by smaller crops in Ivory Coast and Ghana. March London cocoa rose 24 pounds or 1.3 percent to 1,897 pounds a tonne.
Amit Suri, chief operating officer for Olam Cocoa, said if the projected deficit for 2014/15 was realised then prices could rise to around 2,050 pounds a tonne early next year. Raw sugar futures were slightly higher with March up 0.06 cents or 0.4 percent at 16.06 cents a lb and March whites rising $2.40 to $418.20 per tonne.