Coffee hits 2-1/2-year low

Arabica coffee futures on ICE hit a 2-1/2-year low as the market looked for a bottom on Wednesday, and then turned higher along with the commodity complex, while cocoa eased on earlier investor concerns about US budget talks. Raw sugar on ICE Futures US turned higher in choppy, rangebound dealings, following the Thomson Reuters-Jefferies CRB index which also changed direction and firmed up.
"In coffee, we're making a secondary low," said Shawn Hackett, of Hackett Financial Advisors in Florida. March arabica coffee futures closed up 0.75 cent, or 0.5 percent, at $1.4910 per lb, after falling to a 2-1/2-year low at $1.4635. Arabica dealers noted the large speculative short position which has built up over recent months and said a short-covering rally was possible if funds moved to cover the large short position.
"I don't see any bullish news that could drive the market on the upside but I think we may have seen the bottom recently," said Diapason's Latheire, adding he expected prices to consolidate around current levels. "When it gets above $1.60 people will start covering, but you have to remember Brazil has still got to sell some, which might initially cap any upside," the broker said. Top producer Brazil is heading into an off year in its biennial crop cycle after harvesting a large crop this year.
Brazil's agriculture ministry will side-step a decades-old practice of buying up beans to bolster prices that have fallen sharply this year, instead encouraging producers to hedge more and boost efficiency, its top coffee official told Reuters. March robusta coffee futures settled up $5 at $1,886 a tonne. March raw sugar futures on ICE turned up a shade, as a lack of new fundamentals kept the market choppy and indecisive in a range from 18.66 to 20.03 cents for the past six weeks.
March raws closed up 0.13 cent, or 0.7 percent, at 19.57 cents a lb, remaining stuck in its recent trading range of between 19 and 20 cents per lb. March white sugar on Liffe rose $2.40, or 0.5 percent, to finish at $520.50 per tonne. The International Sugar Organisation also said world market prices could remain under pressure until the end of the current October/September crop cycle, reiterating in its monthly report it expects a 2012/13 surplus of 6.18 million tonnes.
Liffe March cocoa futures settled down 8 pounds, or 0.5 percent, at 1,540 pounds a tonne. The December premium over March narrowed for much of the session but widened out late in the session to 48 pounds after closing at 46 pounds the previous session. The premium grew sharply in the previous session after a large amount of cocoa failed to achieve Liffe certification. Cocoa futures on ICE finished lower, with March down $24, or 1 percent, at $2,420 a tonne.