NEW YORK/LONDON: Arabica coffee prices jumped to a two-month high on Monday on technical buying and short covering, even as robusta prices eased off last week's highs. Sugar prices remained under pressure while the market struggled with global oversupply.
Cocoa futures on ICE pulled back from a more than two-year high hit earlier this month as dealers monitored weather in the top growing region of West Africa.
Arabica's strong close last week triggered technical buying that pushed prices to their highest since Oct. 21, testing a key resistance at $1.1725 per lb. That offset continued concerns about global oversupply.
"This is a technical correction and short-covering ahead of the year end. Fundamentally the market is still bearish with talk of a large crop," said Boyd Cruel, analyst at Vision Financial Markets in Chicago.
Rising for a third straight session, March arabica futures on ICE settled up 0.5 cent, or 0.4 percent, to $1.1530 per lb.
In contrast, the buying spree in robusta prices ran out of steam in London as investors locked in profits after reaching $1,813 on Friday, their highest since late August, amid concerns about falling stocks and slow shipments from top grower Vietnam.
Liffe March robusta futures fell $31, or 1.7 percent, to settle at $1,768 a tonne.
The premium on the January contract over March narrowed to around $2 per tonne after trading wider than $50 last week. It was the smallest inversion since it appeared at the end of November.
Raw sugar teetered just above multi-month lows hit on Friday weighed down by global excess as demand remains sluggish. After falling to as low as 16.24 cents per lb, ICE March raw sugar futures was unchanged at 16.27 cents at the close.
On Friday, prices hit 16.22 cents, their weakest level since late July and analysts saw few technical factors to upend the recent downward trend.
Speculators switched to a net short position in raw sugar contracts trading on ICE Futures U.S. in the week ended Dec. 10, U.S. Commodity Futures Trading Commission data showed on Friday.
March white sugar on Liffe settled down 6 cents or 0.14 percent at $443.3 per tonne in light volume of just under 2,500 lots, having earlier touched a contract low of $442.00.
WEATHER WATCH
In cocoa, speculative buying continued as investors bet on a potential shortage of beans from West Africa, the world's No. 1 growing region, even as mild weather was set to bolster yields in Ivory Coast.
Concerns that poor weather will curb supplies ahead of the 2013/14 season sent prices to multi-year highs earlier this month.
ICE March cocoa settled up $18, or 0.65 percent, at $2,791 a tonne after rising to an intraday high of $2,830 and almost testing the recent high of $2,844.
The latest data showed hedge funds and other speculative investors lifted their net long cocoa position to the highest on record, which dates back to 2006.
Liffe May cocoa was up 10 pounds, or 0.6 percent, at 1,768 pounds a tonne in thin turnover of 1,874 lots.
In the short term, Myrto Sokou, senior research analyst with Sucden Financial, said she expects further consolidation with a possible correction lower toward the 40-day moving average at the 1,732 pounds area.
Speculators trimmed net long positions in cocoa and white sugar futures and options on NYSE Liffe in the week ended Dec. 10, exchange data showed on Monday.
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