London coffee sets nine-year high

London robusta coffee futures climbed to a nine-year high on Monday with the rise driven by a supply squeeze ahead of the next Vietnamese crop, dealers said.
White sugar futures ended higher, boosted partly by news of Chinese purchases of Indian sugar while cocoa finished firmer as the market rebounded after holding key support on Friday. "The fear factor rules in the market at the moment," one coffee dealer said, adding concern about the squeeze was prompting short covering.
November coffee rose to a high of $2,026 a tonne, the highest level for the second month since May 1998, and settled $45 up at $1,985. Dealers said new crop supplies from top robusta producer Vietnam are not expected to arrive in time to deliver against November and its premium to January has widened sharply with the move attributed to the building up of a large long speculative position in the contract. November-January peaked at a premium of about $190 on Monday, compared with near parity at the start of this month.
SUGAR HIGHER: White sugar futures were higher with the move seen largely as a technical correction following the market's recent fall to a 26-month low. News that China had purchased Indian supplies was also supportive.
"It is a technical correction from previously oversold conditions. News that India has sold sugar to China also takes some supplies off the world market," one dealer said.
Chinese buyers bought around 100,000 tonnes of Indian sugar, mainly for September and October shipment. December settled $3.40 higher at $273.40. Dealers said the recovery began on Friday with a burst of short-covering ahead of the expiry of the October contract.
A total of only 22,350 tonnes of white sugar was tendered against the contract, sharply down from forecasts early last week that 200,000 to 300,000 tonnes could be delivered.
COCOA MOVES UP: London cocoa futures finished higher with December climbing to a one-month peak with prices rebounding following the recent failure of speculators to drive prices down through key support levels.
December ended 12 pounds higher at 979 pounds a tonne after touching 988 pounds. Dealers said the market had found solid support last week around 935 pounds, basis December, and after surviving several tests last week the market finally began to recover on Friday, a move that gathered further momentum on Monday. They noted concern about black pod disease in West Africa had helped to underpin the market.