Arabica coffee futures on ICE surged nearly 4 percent on Wednesday, changing direction after hitting a 2-1/2-year low, as the dollar fell from its highs after US House Speaker John Boehner expressed optimism about avoiding a fiscal crisis. Cocoa futures climbed quietly while holding their recent ranges as dealers monitored bean arrivals in West Africa, which have been lower than expected. Sugar moved little on a lack of new fundamentals.
March arabica coffee futures jumped 5.70 cents, or 3.8 percent, to settle at $1.5485 per lb, their biggest one-day percentage rise since September 10. The contract slumped to $1.4710 earlier in the session, the lowest level for the benchmark second month since June 2010. While ICE arabica and Liffe robusta coffee futures turned higher, the December/March arabica discount widened to the biggest in nearly 27 years, closing at 10.2 cents per lb. This compared to Tuesday's settlement at 9.35 cents.
"To carry this coffee with the aging penalties, it's 3.5 cents a month to carry. You need the spread to be out to 9 cents in order to break even," said Nick Gentile, chief trader at Atlantic Capital Advisors in New Jersey. The December contract is in its delivery period. There have been 270 lots stopped so far, ICE data showed.
December arabica open interest was small at 134 by November 27, down 49 lots from the previous session. "Arabica prices are down over 52 percent from the 2011 high. However, in our view, a potential deficit season in 2013/14 and an already large short speculator position will temper further downside," Rabobank said in a report on Wednesday.
January robusta futures rose $24, or 1.3 percent, to settle at $1,935 a tonne. The contract fell to $1,836 on Monday, the lowest level for the second month since February 6. Liffe certified stocks stood at 108,580 tonnes as of November 12, after falling by 17 percent since the start of October. Cocoa futures on ICE edged higher with March settling up $11, or 0.4 percent, at $2,458 a tonne as the market continued to lack any clear overall trend.
Benchmark Liffe March cocoa futures closed up 11 pounds, or 0.7 percent, at 1,571 pounds a tonne. Raw sugar futures were little changed, with March closing down 0.07 cent, or 0.4 percent, at 19.16 cents a lb. The market moved sideways as the prospect of a substantial global surplus in 2012/13 prevented steeper gains. March white sugar on Liffe fell $1.10, or 0.2 percent, to end at $509.60 per tonne.
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