Coffee and ICE cocoa futures recovered slightly on Tuesday from the previous session's losses on the back of a weaker dollar and a stronger price for oil. Sugar futures were little changed with the potential for a large delivery against July raws helping to keep a lid on the market.
New York's September cocoa contract was up $9 at $2,654 per tonne at 1547 GMT, after falling 5.5 percent Monday. London's September cocoa contract was down 15 pounds at 1,680 pounds per tonne, having sunk 65 pounds on Monday to settle at 1,695 pounds per tonne. Hungate said sterling's strength was keeping London low. A strong pound makes sterling denominated futures more expensive in terms of other currencies.
"If it's going to recover it will take quite a few sessions," a cocoa trader said. "They've obviously decided they kind of jumped on the commodity recovery a little too early. Maybe it's been taken back to a little bit more sustainable positions."
"I think the ICE contract will come back faster because of the stronger pound compared to the dollar," another cocoa trader said. "Nobody is really counting, in the short term, on dollar strength so if you're going to go long on cocoa you're better off playing the ICE market than the Liffe market." Coffee futures were also up slightly.
New York's September arabica contract was up 1.65 cents at 1.2505 per lb, after settling at a six-week low on Monday at $1.234 per lb. London's September robusta coffee contract was up $26 at $1,498 per tonne, having on Monday dropped $69, to end at $1,472 per tonne. "Some people would probably say coffee had done a little too much too soon," Rabobank's Hungate said.
"We're not quite sure that the fundamentals are really there with coffee with the weather really having improved in Brazil it looks less likely that there will be a major frost scare there." Sugar futures in London fell slightly. August whites in London were down $0.60 at $427.50 per tonne and July raw sugar futures on ICE were up 0.03 cent at 14.89 cents per lb.
"There's probably a slight preoccupation with getting close to shore and getting comfortable with the position you have and making sure you're not too over-extended in anything at the moment," Hungate said, referring to a more cautious approach among investors.
"I think the lust has gone off a bit on the whites premium since the Pakistani buying that everyone was anticipating didn't materialise," he added. Pakistan cancelled a tender for whites earlier this month. Hungate said he sees the market consolidating at the moment and is bullish on the long-term the fundamental picture.
Comments
Comments are closed.