Arabica coffee jumps 4.5pc on Brazil weather; raw sugar also up

NEW YORK/LONDON: Arabica coffee futures on ICE closed 4.5pc up on Friday, climbing to a fresh 4-1/2 year high with the crop outlook in Brazil dented by dry weather. Raw sugar prices also rose.

COFFEE

July arabica coffee settled up 7 cents, or 4.5pc, at $1.6235 per lb?? after setting a 4-1/2-year high of $1.6315 earlier in the session.

Dealers said the market was supported by the prospect of a significant drop in production in Brazil this year, due to drier-than-normal weather and an off-year in the country's biennial crop cycle.

Dry conditions could also reduce the size of next year's crop in the world's top producer, they said.

"The conditions for most of the arabica areas represent a clear downside risk (for 2022/23)," said broker Marex Spectron in a report to clients.

The Brazilian government has issued a Water Emergency Alert for the period from June to September in the region that includes the states of Minas Gerais, Goias, Mato Grosso do Sul, Sao Paulo and Parana. It expects low precipitation throughout that period.

July robusta coffee settled up $66, or 4.4pc, at $1,583 a tonne.

SUGAR

July raw sugar settled up 0.24 cents, or 1.4pc, at 17.36 cents per lb after setting a two-week high of 17.69 cents.

Dealers said the front month's discount to October was narrowing, possibly reflecting interest from the trade in taking delivery when the July contract expires at the end of this month.

The prospect of a small global surplus in the 2021/22 season should, however, keep a lid on prices.

August white sugar ??settled up $2.10, or 0.5pc, at $459.60 a tonne.

COCOA

September London cocoa ??settled up 1 pound, or 0.1pc, to 1,632 pounds per tonne.

Dealers said supplies remained ample with the market awaiting the release of an updated 2020/21 balance forecast by the International Cocoa Organization, expected to be issued before the end of this month.

The ICCO, in its last quarterly update in late February, forecast a surplus of 102,000 tonnes for 2020/21.

September New York cocoa ?settled down $12, or 0.5pc, to $2,456 a tonne.