London January robusta coffee settled $22 higher at $1,354 a tonne on Monday. Market supported by a sharp advance in ICE arabicas driven by quality concerns in top producer Brazil and a softer dollar. March white sugar in London finished off $8.10 at $610.30 a tonne. Setback helped to largely erase gains during a sharp late rally on Friday which was seen as overdone.
March cocoa in London ended 3 pounds lower at 2,173 pounds a tonne. Strong arrivals data from top producer Ivory Coast helping to keep a lid on the market. Earlier, arabica coffee futures rose to their highest level in more than one week on Monday, boosted by a softer dollar and quality concerns in Brazil following the government's rejection of some supplies offered by farmers.
Cocoa futures were little changed, while sugar fell after the market's late rally on Friday was seen overdone. The dollar fell against the euro and most major currencies on Monday after the United Arab Emirates central bank promised additional liquidity to local banks, soothing concerns about a looming debt default.
About a third of the coffee that farmers are selling to the Brazilian government to fulfil an option contract is being rejected for failing to meet quality standards, a government agriculture inspector said on Friday.
"Lower-quality coffee beans are the result of heavy rainfalls. Brazilian coffee traders reported that 40 percent of the entire coffee crop may be affected," Commerzbank said in a market note on Monday.
"Hence, a shortage of high-quality coffee at the world's largest coffee producer should support the world-market price of arabica coffee," Commerzbank added. Dealers said the arabica markets improved performance during the last few days had also buoyed the chart outlook.
"Arabica coffee is looking bullish technically," said Nick Hungate, a soft commodities trader with Rabobank. Cocoa arrivals at ports in top grower Ivory Coast reached around 378,000 tonnes by November 29, exporters estimated on Monday, compared with 243,096 tonnes in the same period of the previous season.
Dealers said December cocoa in London was hovering around the key 2,150 pound strike price where there are a lot of call options. December options expire on Monday. Sugar futures fell back after rising sharply on Friday. "The market did go a little bit too far on Friday," Hungate said.
Sugar prices appeared to be well supported in a 21-25 cents a lb range. "We remain constructive on the upside potential for sugar and there has been more constructive news early this week," Barcalys Capital said in a market note, referring to forecasts calling for more rain in Brazil.
"Brazil is the largest sugar exporter in the world and bad weather conditions have already markedly reduced yields this year," Barclays Capital said. Dealers said they expected the whites-over-raws premium to be robust due to expectations of increasing demand for white sugar from South Asian countries.
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