London robusta coffee futures settled mixed on Wednesday after spending much of the session higher on concerns over dry weather in Brazil, while sugar and cocoa fell on speculative selling driven by the US market.
London November coffee futures finished down $18 at $1,934 per tonne, while second month January closed up $9 to $1,826. Although the market was seen as overbought, continued dry weather in the world's biggest coffee grower, Brazil, is providing support, dealers said.
Brazil's coffee belt needs significant precipitation this month to trigger and sustain flowering for the crop set to be harvested in 2008. There is no significant rainfall expected for at least the next seven days, DTN Meteorlogix said. The rise in arabicas propelled robustas throughout much of the session, dealers said.
"Robustas are going along for the ride," one dealer said. The November/January spread, which weakened lately, was likely to narrow further, with concern about short-term supply tightness possibly overdone, dealers said.
The spread slipped to $108 from around $120 on Tuesday. "I think it could drop back to $70 or so," a trader said. London cocoa futures fell on speculative selling on the back of the US market, which headed south to a 2-week low after Tuesday's sharp losses when origin selling and long liquidation pressured prices.
Top producer Ivory Coast officially started its 2007/08 cocoa season on Monday. December closed down 11 pounds to 951 pounds, in moderate volume of 8,289 lots. The cocoa market digested a bearish report on output from Ghana, the world's number 2 producer, and a bullish report on black pod disease in Ivory Coast. There was no immediate market impact, but West African output and the incidence of black pod remain two key talking points.
Ghana's 2006/2007 cocoa crop reached around 600,000 tonnes and consistent rainfall over recent months suggest next year's harvest will be bigger, the head of the country's Cocobod regulator said on Wednesday.
Ivory Coast, the world's top cocoa producer, will not produce maximum yields in the newly opened 2007/2008 season because of the fungal disease black pod, the head of the country's BCC industry body said on Wednesday. London white sugar futures fell on speculative selling driven by the New York raw sugar market, pressured by a huge global oversupply of the sweetener.
December settled down $3.00 to $275.00 per tonne. Traders talked of trade short covering against trade selling in light volumes. Arbitrage activity was light, with the whites-over-raws premium between the London and New York March contracts steady at around $63.50-64.50.
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