London cocoa futures hit six-week low as nearby premium weakens

LONDON: London cocoa futures on ICE hit their lowest in six weeks on Wednesday as the premium for nearby cocoa weakened, though available stocks remained tight overall, especially in Europe.

COCOA

* July London cocoa were up 2 pounds, or 0.1%, to 1,682 pounds a tonne by 1347 GMT, after hitting a six-week low earlier.

* The front month May's premium to July <LCCK9-N9> weakened to around 90 pounds from a near record high of 159 pounds hit on Monday.

* Dealers said a shortage of good quality cocoa in Europe had helped to drive up the May contract's premium recently, and this shortage persisted even though the premium has eased.

* "There's very little uncommitted stock right now in Europe. It doesn't mean you have a big (global) deficit but it certainly means you don't have a big surplus," said a dealer.

* July New York cocoa was down $13, or 0.6%, at $2,280 a tonne, having hit a six-week low earlier.

SUGAR

* July raw sugar rose 0.03 cents, or 0.25%, to 11.97 cents per lb, as the market continued to consolidate after falling to its lowest since October 2018 last week.

* A global sugar supply deficit of 2.1 million tonnes is seen in the 2019/20 season, according to S&P Global Platts.

* Broker INTL FC Stone sees a global sugar deficit of 5.7 million tonnes in 2019/20, but sees stocks at 74 million tonnes, limiting price upside.

* "All this talk about global production deficits probably means the lows of last week may prove to be the lows for the longer term," said a dealer.

* However, he added: "Any push above 13 cents will find good producer selling so that is likely to put a ceiling on prices in the short term."

* India is set to see a 3-million tonne drop in production in the 2019/20 season while production in Thailand is expected to fall by 2 million tonnes, according to the International Sugar Organization.

* India's monsoon rains will arrive on its southern coast on June 4 and deliver less rain than average this year, a private weather forecaster said.

* ICE August white sugar was up $0.7, or 0.2%, at $329 a tonne.

COFFEE

* July arabica coffee futures were 0.3 cents, or 0.3%, higher at 91.25 cents per lb, pulling away from a 13-year low of 87.60 cents set earlier this month.

* Dealers said low prices were beginning to impact production and that prices may rise in the short term following a prolonged decline driven by excess Brazilian supplies.

* July robusta coffee fell $5, or 0.4%, to $1,387 a tonne, extending its rebound from a nine-year low of $1,267 set earlier this month.