Arabica coffee up

Arabica coffee futures soared around 7 percent on Thursday after top grower Brazil's crop supply agency revised its production estimate lower as dry weather was expected to curb output, though many felt the rally was overdone. Raw sugar futures on ICE Futures US dropped, while Liffe white sugar inched up to a 6-1/2-month high before turning lower. Cocoa markets were quietly higher.
Brazil's new coffee crop is forecast at 44.57 million 60-kg bags, down nearly 9 percent from a January estimate due to drought over the heart of the arabica growing belt, Brazil's Conab said, pegging arabica production at 32.23 million bags and robusta at 12.33 million bags. Conab's estimate is typically below trade house estimates, which are currently ranging widely from below 40 million bags to around 56 million bags. Traders were particularly surprised by Conab's robusta production forecast, nearly 5 million bags below industry estimates of around 17 million bags. Robusta growing regions were not affected by the January-February drought.
Traders said forecasts for cool weather in Brazil's coffee belt later this month has also spooked the market, though temperatures will remain well above freezing levels. July arabica futures on ICE surged 12.60 cents, or 6.8 percent, to settle at $1.9680 per lb. "Certainly the market report has had a reaction but is it justified? It wouldn't be surprising if it came all the way back down again," a London-based broker said.
July robusta coffee on Liffe rose $47, or 2.2 percent, to close at $2,138 a tonne. Raw sugar futures on ICE dropped from the previous session's nine-week high on Thursday, with dealers and analysts saying that ample stocks were capping gains after a rally earlier in the week, despite forecasts for a global deficit in the coming year.
ICE July raw sugar futures finished down 0.05 cent, or 0.3 percent, at 18.20 cents per lb, having touched 18.28 cents on Wednesday, supported by forecasts for a global deficit in 2014/15 and El Nino weather curbing output. Saxo Bank head of commodity strategy Ole Hansen said world sugar stocks would provide a buffer against any global deficit.
August white sugar on Liffe closed down $1, or 0.2 percent, at $493.40 a tonne, after touching the highest level since late October at $495.90. July cocoa on Liffe ended up 8 pounds, or 0.4 percent, at 1,820 pounds a tonne, remaining stuck inside the 100 pound range the market has traded for several months. July cocoa futures on ICE rose $16, or 0.6 percent, to close at $2,907 a tonne. Barry Callebaut, the world's biggest industrial chocolate maker, expects global cocoa supply will be in line with demand in 2013/14, its chief executive said on Thursday.