Coffee jumps

Arabica coffee futures on ICE soared nearly 5 percent in technical trading on Tuesday, on heavy short covering in a market that was seen as unsustainably oversold. It was arabicas' biggest one-day jump in five months as speculators, who currently hold the biggest net short position in more than at least six years, appeared to panic that they were leaning too far on bets that prices would fall.
"The chart patterns are forcing their hand," said Jack Scoville, a vice-president with The Price Group in Chicago. The active May arabica contract surged 8.55 cents, or 4.8 percent, to finish at $1.8735 per lb, after rising to $1.8765. The front month hit a 17-month low at $1.7445 per lb last week.
The market was technically oversold on the 14-day relative strength index for more than two weeks, and today's rally lifted the market up from this range. Total volume was heavy at nearly 40,000 lots, a six-week high, preliminary Thomson Reuters data showed. "I think it was technically oversold and funds came back in," said John Wolthers, trader at Comexim in Santos, a key port town for Brazil's coffee shipments. Automatic buy orders were triggered around $1.82 and again above $1.84, basis May, dealers said.
As of March 20, speculators were holding their biggest net short position in arabica futures and options since the data from the US Commodity Futures Trading Commission was made available in 2006.
"The arabica market corrected lower earlier than we had anticipated and we expect a modest rebound given the large short position of speculator funds in the market," Rabobank said in a report on Tuesday. Robusta coffee futures on Liffe rose with May closing up $44, or 2.2 percent, at $2,059 per tonne. Sugar prices turned lower, extending their losses made on Monday after India decided to allow an extra 1 million tonnes of unrestricted white sugar exports. India has already allowed mills to export 2 million tonnes of sugar without restrictions.
May raw sugar futures on ICE fell 0.48 cent, or 1.9 percent, to settle at 24.30 cents per lb, after touching a low of 24.26 cents. May cocoa on ICE rose $25, or 1 percent, to settle at $2,356 a tonne, while May cocoa on Liffe climbed 13 pounds, or 0.8 percent, to end at 1,526 pounds a tonne. "The market has been volatile within a range of 200 pounds for two or three months now," one London dealer said, noting that most analysts had a fairly balanced supply/demand outlook for the 2012/13 season.