Arabica coffee rise on worries over Brazil's weather

Arabica coffee rose for a sixth straight day on Monday on concerns over below-normal rainfall in Brazil, while raw sugar edged down, pressured by a slide in oil prices and a firm dollar. New York cocoa firmed in light chart-based buying, with traders expecting on January 15 slightly weaker European cocoa grind data, a measure of demand.
Arabica futures rose on short-covering and fresh buying while index selling prevented stronger gains, traders said. The annual index allocation by funds began on Thursday and is expected to continue until January 14. "Weather forecasts in Brazil are the catalyst," said Tracey Allen, commodities analyst with Rabobank. Continued forecasts for below-normal rainfall in Brazil's arabica coffee growing regions boosted the market with unusual concern following Brazil's unprecedented drought at this time in 2014, traders said.
South-eastern Brazil is expected to get about half the normal amount of rainfall for this time of year by January 27, Reuters weather data showed on Monday, renewing concerns over the area's crops and reservoirs. Front-month March arabica coffee rose 0.45 cents, or 0.25 percent, to $1.8050 an lb at 1502 GMT. It finished last week up 12 percent, the biggest weekly surge since February 2014. March robusta coffee traded up $6, or 0.3 percent, at 1,969 per tonne.
In sugar, the front-month raw contract edged down 0.12 cent, or 0.8 percent, to 14.79 cents a lb, and remained within sight of Thursday's peak of 15.17 cents, the highest since December 22. Sugar prices were hit by a sharp slide in oil prices and a strong dollar. Cheap oil makes cane-based ethanol less competitive. Dealers said last week's Commitments of Traders report, which showed a reduction in a net short position in raw sugar, could underpin raw sugar prices. March white sugar was down $3.00, or 0.8 percent, to $389.60 per tonne.
Cocoa futures firmed in consolidating dealings after the New York market soared more than $100 to a 2-1/2 month high on Thursday in chart-based buying. "A dry stretch in centre-south Brazil combined with a dry bias in Western Africa appears to have sparked some spec interest in the softs," said Michael McDougall of Newedge. New York March cocoa traded up $16, or 0.5 percent, at $2,984 per tonne. London May cocoa rose 15 pounds, or 0.8 percent, to end at 2,018 pounds per tonne.