Arabica coffee jumped over 4 percent higher on Wednesday, as top grower Brazil's crop prospects deteriorated and the US dollar tumbled, while Liffe cocoa settled at a three-year low. Sugar futures reversed earlier losses, as investor sentiment was boosted by the co-ordinated move by the world's leading central banks to address pressures in global money markets.
Arabica coffee prices rallied more than 4 percent, supported by the improved investor sentiment and a diminished crop outlook in top producers Brazil and Colombia. "The dollar is weaker so consequently everyone is buying commodities and coffee is no exception," said a London-based broker.
March arabica coffee on ICE jumped 9.35 cent, or 4.1 percent, to settle at $2.3690 per lb, its biggest one-day percentage surge since October 21, in light volume. "Brazilian crop damage has been noted over recent weeks and coffee traders, including us, are very bullish but overwhelmed by macro considerations," said one veteran softs dealer in New York.
Brazil's 2012 coffee harvest will be smaller than the last "on-year" crop in 2010 because of bad weather that has taken a heavy toll on trees, local co-operative Cooparaiso said on Tuesday. January robusta coffee on Liffe closed up $11 at $1,961 a tonne. Liffe cocoa futures finished at a three-year low while ICE cocoa closed at the lowest since more than 2-1/2 years. Both markets swung temporarily into positive territory on the positive sentiment of investors, with the firm sterling giving the ICE market an additional lift.
A bearish report on the Ivorian 2011/12 crop released late Tuesday by a closely followed analyst, subdued the market's reaction to the positive macro news, dealers said. March cocoa on Liffe eased 18 pounds to settle at 1,465 pounds a tonne, its weakest close since November 2008, after earlier dipping to a contract low at 1,445 pounds. It closed November down 14 percent, its worst monthly performance since March.
March cocoa on ICE closed down $15 at $2,305 a tonne, its weakest close since March 2009, after falling to a session low at $2,259. It closed the month down 15 percent, also the second-position's biggest monthly drop since March. Benchmark March futures gained 0.20 cent to finish at 23.69 cents a lb. The front month fell to 22.71 cents last week, the lowest level since June. March white sugar futures on Liffe rose $9.40, or 1.6 percent, to settle at $613.60 per tonne. The contract slid to $594.00 on Tuesday, the lowest level for the front month since May.
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