Arabica coffee jumps from 4-1/2-month low, sugar eases

Arabica coffee futures on ICE rallied after tapping a 4-1/2-month low on Monday, rising on technical support, while raw sugar extended losses to hit a 2-1/2-month low as the weak Brazilian currency attracted selling. Cocoa futures rose for the second straight session. In coffee, March arabica coffee finished up 4.65 cents, or 2.7 percent, at $1.7865 per lb, after nudging down to $1.7350, the lowest for the second-position contract since July 23.
The contract rebounded on strong chart-based support around $1.7370, the 50 percent Fibonacci retracement level from the November 2013 low. The market remained volatile as dealers said the outlook for top grower Brazil's 2015/16 coffee crop remained uncertain, since recent rains may not have come in time to prevent significant crop losses. "The rain will not recover the losses, there had already been losses before the rain arrived and it will not recover those," said Andrea Thompson, an analyst at CoffeeNetwork, part of INTL FC Stone.
March robusta coffee fell $9, or 0.5 percent, to settle at $1,965 a tonne. Raw sugar futures were initially higher, after data on Friday showed speculators increasing their bearish stance and leaving the market susceptible to short covering rallies. Prices soon turned lower as the weak real, the currency of top-grower Brazil, brought sellers into the market, traders said.
"The weather is good in Brazil and the real is still pretty bad," said Jack Scoville, senior market analyst for the Price Futures Group in Chicago. "It is a bearish looking chart, and since the holiday demand should be covered now there is sugar to go around." March raw sugar closed down 0.02 cent, or 0.1 percent, at 14.96 cents a lb, while March whites fell $1.70, or 0.4 percent, at $388.70 per tonne.
"The combination of potential Indian subsidies for raws exports, the recent agreement in China between the sugar association and refineries to limit imports and CS Brazil continuing its crush season well into December, despite rains, does not help sugar prices," said Nick Penney, a senior trader at Sucden Financial. Cocoa futures were quietly higher with the New York March contract closing up $16, or 0.6 percent, at $2,873 a tonne. London March ended up 17 pounds, or 0.9 percent, at 1,896 pounds a tonne, with resistance at the 200-day moving average 1,912 pounds.