Robusta coffee extends gains to two-year peak, arabica follows

Robusta coffee futures on ICE climbed to a two-year high on Tuesday, rising for the seventh out of the past eight sessions on supply concerns in the world's top growers, helping to lift arabica prices to a four-week top. Sugar and London cocoa prices fell, while the British pound's firmness against the US dollar buoyed the New York cocoa market.
January robusta coffee settled up $44, or 2.1 percent, at $2,153 per tonne, after peaking at $2,161, the highest for the second contract month since October 2014. Dealers said worries about irregular rainfall hurting the flowering season in Brazil and expectations for relatively tight supplies in top grower Vietnam pushed prices higher, along with steady buying interest from funds.
"The robusta crop in Vietnam is just not going to be what it needs to be," said Shawn Hackett, president of Hackett Financial Advisors. "The fastest part of (coffee) demand is in robusta, but production in the country is flat." Rising robusta futures prices have boosted prices of the bitter bean in top robusta producer Vietnam to their highest since May 2013.
A drought in Brazil's robusta region has hurt production there, and in turn increased demand for the world's biggest coffee grower's arabica supplies, helping to lift those futures prices as well, traders said. December arabica coffee settled up 1.65 cent, or 1.05 percent, at $1.5875 per lb, after reaching the highest since September 22 at $1.596. Total open interest rose for the seventh straight session to a 4-1/2-month high at 192,332 on Monday, exchange data showed. Sugar futures eased, as prices nudged further below the highest level in more than four years, reached on October 7 at 23.69 cents. March raws settled down 0.14 cent, or 0.6 percent, at 23.02 cents per lb.
Brazil's main center-south cane belt will likely turn out a smaller crop next season, despite a bright market outlook for sugar, industry group Unica said, as the lack of investment in fields in recent years takes its toll on the crop's potential. December white sugar settled down $6.40, or 1.1 percent, at $597.90 per tonne. In cocoa, London March futures settled down 18 pounds, or 0.8 percent, at 2,168 pounds per tonne. December New York cocoa settled up $8, or 0.3 percent, at $2,698 per tonne.