Arabica coffee futures on ICE flirted with a 1-1/2-year low in choppy dealings on Tuesday, buoyed earlier by short-covering but pressured by the tumbling currency in top grower Brazil, while robustas tapped a two-month low. Raw sugar nudged down in thin dealings while cocoa inched higher. Arabica prices bounced as the market lacked enough selling to push it below Monday's 1-1/2-year low, triggering short-covering, despite the weak currency in top grower Brazil.
The real extended losses sharply to a 12-year low against the US dollar on fears that Brazil is poised to lose its investment-grade rating as economic growth disappoints. But traders said it failed to attract producer selling. September arabica closed down 0.15 cent, or 0.1 percent, at $1.2025 per lb. "Arabicas are driven by funds. Roasters and origin selling are pretty quiet right now," said Kona Haque, head of research at commodities house ED&F Man.
Meanwhile, the spot arabica futures premium on Brazil's thinly traded market jumped to a $1.90 premium over the December contract, a two-month high. In robusta coffee, traders focused on a large front-month spread's premium before the July contract expires on Friday. September robustas settled down $1, or 0.06 percent, at $1,626 a tonne, after touching a two-month low of $1,624. Raw sugar futures edged down in thin dealings, nearing the lowest in more than five weeks, pressured by forecasts of dry weather in center-south Brazil and the weak Brazilian real.
"It has been a recent feature of the sugar market that values begin to move sharply once the FX market in Brazil opens and we suspect producers there have lowered their pricing ideas as the real has weakened," said Nick Penney, a senior trader with Sucden Financial Sugar. Haque said, "For today, macro and currency factors are having more impact than weather, but part of the reason why sugar is at these lows is that there are forecasts for dry weather in Brazil."
A huge overhang of Indian and Thai old-crop sugar continued to weigh on the market. October raw sugar finished down 0.07 cent, or 0.6 percent, at 11.17 cents a lb, just above the session low at 11.16 cents, the lowest since June 19. October white sugar futures closed up 20 cents, or 0.06 percent, at $349.30 per tonne. September New York cocoa settled up $11, or 0.3 percent, at $3,204 a tonne, while September London cocoa ended up 3 pounds, or 0.1 percent, at 2,134 pounds a tonne.