Robusta coffee futures on Liffe fell sharply on Monday, under pressure from an imminent large crop in Vietnam, while white sugar and cocoa futures also fell. US commodity markets were shut on Monday for Labour Day. Robusta coffee futures fell on small volumes of activity as top robusta producer Vietnam's large crop weighed on prices.
"There's a massive robusta crop in the offing and that's going to depress prices," Gary Mead, analyst at VM Group said. "There's no real sign of any supply shortages." November robusta coffee on Liffe settled $81 or 3.6 percent weaker at $2,914 a tonne after earlier hitting $2,181, the lowest level for the benchmark second month since August 11. "There's going to be a surplus of robustas - Vietnam looks pretty good, Indonesia's production is going to rebound, India's crop is looking good," a London-based broker said.
ABN Amro/VM Group estimates Vietnamese 2011/12 robusta coffee production will rise to 21.5 million 60-kg bags, compared to the International Coffee Organisation's 2010/11 crop figure of 18.5 million 60-kg bags. "The large Vietnamese crop is sitting above the market," a second broker said, adding it was difficult to find any bullish factors in the robusta market.
White sugar futures drifted lower, weakened by a firmer dollar and risk aversion among investors as concern about Greek and Italian public finances deepened. The prospect of a large Russian crop also weighed. Russia's seventh sugar beet test showed an average root weight of 498 grams, up from 292 grams during the same test last year, the Russian Sugar Producers' Union industry lobby said on Monday.
Trade house Czarnikow's head of research Toby Cohen on Monday said in an interview he expected Russia to have a "fantastic crop" but he gave no details. "Russia's position as a big importer in the market is starting to fade," he said. Uncertainty on the crop outlook in top producer Brazil helped to underpin the market.
Analyst Canaplan continued to hold the lowest view on Brazil sugar output, forecasting the current crop will produce between 28 million-28.5 million tonnes of sugar. "Canaplan's estimate of 28.5 million tonnes of sugar is at the low end of estimates, but no one knows yet what size the crop will end up," a London-based broker said. October white sugar futures on Liffe settled $3.00 lower at $750.80 per tonne.
"Position rolling is putting October/December under pressure ahead of October's expiry next week," the broker said. Cocoa futures were slightly lower as ample supplies from West Africa weighed on prices, with attention turning to the outlook for 2011/12 supply. Analysts and traders forecast a global 2010/11 surplus in excess of 300,000 tonnes after a bumper West African crop, but also foresee a potential switch to a small deficit in 2011/12.
"The only thing that's keeping prices at this level is the expectation of a global deficit next year," VM Group's Mead said. Early indications suggest Ivory Coast is likely to see a decline in production in 2011/12 following this season's record crop with the outlook tempered by meagre rains in early August and a shortage of migrant workers. Ivory Coast farmers said on Monday that good rains in the last week may strengthen the outlook for the 2011/12 main crop in western regionsbut warned that black pod fungal disease was spreading and threatening crops in the east. Liffe December cocoa ended 8 pounds lower at 1,943 pounds a tonne.
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