Liffe March white sugar rises $5.10 to close at $799.50 per tonne on Monday. Market supported by trimmed forecasts for India's crop and renewed physical demand. Liffe May cocoa closes 25 pounds lower at 2,100 pounds a tonne. Market weighed down partly by a promising outlook for Ivory Coast mid-crop, while dealers continue to eye political developments in the world's top grower.
Liffe May robusta coffee ended $6 higher at $2,243 a tonne. Market consolidating just below last week's 2-1/4 year peak, underpinned by strength of ICE arabica futures. Dealers said lower sugar prices encouraged more physical buying, as the March contract on ICE had its first weekly loss in three weeks on Friday after falling 3.9 percent.
"There's probably a bit of buy-back after that major drop at the end of last week," said Keith Flury, analyst at Rabobank in London. "And as long as the supply situation is pretty bullish, (sugar) is still able to maintain that upward trajectory." Markets were also boosted after an Indian state cut its outlook for the country's 2010/11 sugar crop to 24 million tonnes, below government estimates. The government in India, the world's second-largest producer after Brazil, will only approve 500,000 tonnes of sugar exports if there is enough sugar for domestic consumption. India is the world's biggest consumer of the sweetener.
"India's the crunch. With the estimate closer to 24 (million tonnes) than 25, it's giving people renewed confidence, so we might see (the market) climb slowly back up," one London-based trader said, adding that support was at 32 cents a lb, with resistance at 34 cents. Coffee futures were higher as better quality beans continued to be hard to find, propping up arabica prices. "Brazilian prices have rocketed; exporters are really struggling to source quality coffee," a European fund analyst said.
Last week, the futures price for arabica coffee trading in Sao Paulo were above the 13-1/2-year highs in benchmark New York trading for the first time since the 1990s, indicating high demand for coffee in Brazil, dealers said. "Either their crop is not as big as expected or they've already over-exported," the analyst said about Brazil. Colombia, the world's biggest producer of high quality washed arabica beans, is entering its third year of lower-than-average production due to adverse weather and a rejuvenation program that took many trees out of production.
As a consequence, many roasters have turned to Brazil, the world's biggest coffee producer. ICE March arabicas gained 1.65 cent or 0.7 percent at $2.5095 per lb at 1537 GMT, below its 13-1/2-year peak of $2.5360 a lb from last Thursday. Liffe May robusta coffee was up $6 or 0.3 percent at $2,243 per tonne, below its 2-1/4-year high of $2,287. Coffee exports in Uganda, Africa's second-largest producer, fell by 18.6 percent in January compared with a year earlier due to unfavourable weather, a source at the Uganda Coffee Development Authority said on Monday. Ivory Coast continues to harvest a bumper crop, with cocoa arrivals at ports 12.5 percent higher compared with the same period last year by February 6, though shipments were halted since the ban, hitting the tail end of the crop.
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