Cocoa hits more than 1-yr low, raw sugar plumbs one month trough

LONDON: London cocoa futures on ICE hit their lowest in more than a year on Monday amid escalating demand worries and signs of ample supply next season, while raw sugar recovered after hitting a near one month low.

COCOA

September London cocoa had fallen 14 pounds, or 0.8%, to 1,674 pounds per tonne by 1231 GMT, having hit its lowest since last May at 1,656.

Above-average rains last week in most of top producer Ivory Coast's cocoa regions bode well for the start of the next main crop in October but could hurt the current mid-crop, farmers said.

An expected rise in production in the upcoming 2020/21 season combined with increased signs demand is flailing amid the coronavirus-induced economic downturn is weighing on cocoa.

September New York cocoa fell $38, or 1.6%, to $2,240 a tonne.

Speculators increased their net short position in ICE New York cocoa by 574 contracts to 14,227 contracts in the week to June 23.

Cocoa arrivals at ports in Ivory Coast reached 1.962 million tonnes between Oct. 1 and June 28, exporters estimated, down 6.7% from the same period last season.

SUGAR

July raw sugar, which expires on Tuesday, dipped 0.01 cents, or 0.09%, to 11.56 cents per lb, having hit a near one month low of 11.33.

Limiting losses in sugar, oil prices recovered, pushing mills in Brazil closer to the point where it might be more profitable to make cane-based ethanol fuel at the expense of sugar.

"In the next few weeks the sugar price has to connect with the ethanol price and push (Brazilian) mills to make more ethanol/less sugar. As it stands, it does not look as if that is going to happen," said Mares Spectron in a note.

"The Brazilian harvest comes to its mid-point at end July, it will soon be too late to switch from making max sugar/min ethanol. Then we will be stuck with a big surplus that cannot be got rid of - sugar demand being extremely inelastic," it added.

Speculators raised a net long position in ICE raw sugar on in the week to June 23 by 17,453 contracts to 40,081 contracts, CFTC data showed.

August white sugar fell $0.60, or 0.2%, at $350.60 a tonne.

COFFEE

September arabica coffee rose 3.6 cents, or 3.7%, to 100.45 cents per lb, having hit its highest in two weeks.

Speculators increased their net short bet in ICE arabica coffee futures by 3,516 contracts to 27,669 contracts in the week to June 23.

"Reports show good increases in online demand, helping to ebb concerns over demand loss due to coffee shop closures," said Rabobank in a note.

September robusta coffee rose $26, or 2.3%, to $1,178 a tonne.

Vietnam's coffee exports in the first half of this year are expected to have increased 3.7% from a year earlier to 955,000 tonnes.