Liffe January robusta coffee ended $53 higher at $1,893 per tonne on Thursday after setting a two-year high, for the second month, of $1,910. Market underpinned by wet weather concerns in key robusta producer Vietnam and fund buying. Liffe front-month December white sugar ended $6.70 lower at $723.90 per tonne. Dealers noted market may need correction after becoming overbought in recent rally.
Liffe second-month March cocoa ended 34 pounds higher at 1,923 pounds a tonne. Market rises on technical trading, said dealers. "Agricultural markets are in a very bullish mode right now and coffee is one of the markets where the fundamentals have been tight," Abah Ofon, analyst at Standard Chartered Bank said. "It boils down to supply, demand has been growing consistently, it's really about supply as estimates are being revised downwards in countries like Colombia," Ofon said.
Colombia, the world's third-largest coffee grower, had two consecutive years of lower production due to adverse weather and a tree renovation programme. It had been hoped that 2010/11 output would show a recovery. Dealers said there was a lack of origin selling on both markets so there was limited resistance against the rally. "There's no producer selling in London because Vietnam's harvest is not really underway," said a London-based broker.
"Technically, the market remains firmly in an uptrend and any recent corrections have been short-lived and not very deep," Nick Penney of Sucden Financial said, referring to technical indicators based on historical price data. Dealers said futures market risked being overbought and could correct lower to entice fresh cash offtake. "Cocoa bounced off lows on technicals," a London-based broker said.
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