Arabica coffee futures ended higher Monday as the market rebounded after touching a 1-year low, with the rest of the softs complex dawdling in modest business as players' focus seemed to be slipping away ahead of the year-end holidays. Volume traded on ICE Futures US soft commodity markets were all averaging over 40 percent below the 30-day norm near the end of Monday's session, Thomson Reuters preliminary data showed.
"I think people are starting to wind down and are in a holiday mode," Nick Gentile, the chief trading official in commodity fund Atlantic Capital Advisors in New Jersey, said.
New York's March arabica coffee futures gained 4.35 cents, or 2 percent, to finish at $2.1945 a lb, having plumbed a one-year low for the second position contract at $2.1235.
March robusta coffee on Liffe was down $19 to end at 1,878 a tonne. "Coffee should be supported around $2.10 but these are still pretty elevated prices," Rabobank analyst Keith Flury said, adding that industry buyers appeared well covered and so were under little immediate pressure to buy. Coffee prices have been dragged down recently along with many other financial markets by general risk aversion among investors linked to the eurozone debt crisis.
Gentile said the debt and budget crisis in the EU and the United States remained "in the back of everyone's minds." Diminished prospects for the coming coffee crop in top producer Brazil following a prolonged spell of dry weather have helped to limit losses in bean values.
New York's March raw sugar contract rose 0.01 cent to close at 23.09 cents per lb, while the March white sugar futures on Liffe fell 30 cents to end at $599.40 per tonne. The decline in the sweetener has been driven partly by large crops in several producing countries in the northern hemisphere including the European Union, Russia and India. "Rosy global production prospects in key producer-exporter states, with the exception of Brazil, are weighing on prices," Barclays Capital said in a market note on Monday.
India produced 4.6 million tonnes of sugar between October 1 and December 15, the Indian Sugar Mills Association said on Monday, up 17.9 percent year-on-year. "We've seen a sharp correction since mid-October. It seems fair value to us (now) especially given concerns about Brazil's crop next year. There is not too much downside from here," Flury of Rabobank said.
Brazilian sugar output fell this season for the first time in more than a decade due to bad weather conditions and a lack of investment in cane replanting. Most leading analysts say a full recovery would take at least two years. Cocoa futures were lower in choppy trading as the market struggled to establish a clear trend after last week's sharp rally from a three-year low.
March cocoa on ICE lost $31 to finish at $2,070 a tonne, while March cocoa on Liffe fell 26 pounds to close at 1,343 pounds a tonne. Dealers noted the run-up last week had been fuelled largely by short-covering by investors and funds. Speculators switched to a net long position in NYSE Liffe cocoa futures of 277 lots in the week to December 13, exchange data showed. A week earlier, speculators had held a net short in cocoa of 2,695 lots.
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