Robusta coffee price at 5-1/2-year high, sugar jumps

Robusta coffee futures on the ICE futures market rose to the highest in nearly 5-1/2 years on Wednesday on investor buying against a backdrop of tightening supplies, while the March raw sugar premium jumped. Cocoa prices were little changed. May robusta coffee futures settled up $21, or 0.9 percent, at $2,257 per tonne, after rising to $2,279, the highest for the second position since September 2011.
Dealers said a continued lack of hedge selling, with top robusta producer Vietnam celebrating the last day of the Lunar New Year holiday called Tet, also helped clear the way for prices to advance.
"I think it is a combination of some spec buying and a lack of selling as it is Tet still," one dealer said.
Speculators have been bullish since the beginning of this year due to the prospect of a second consecutive poor robusta crop in Brazil and a decline in production in Vietnam.
March arabica coffee settled up 0.6 cent, or 0.4 percent, at $1.5015 per lb, with recent favourable crop weather in Brazil's arabica areas keeping the market on the defensive.
Sugar futures rallied as buying of the March/May spread lifted the spot contract's premium to 0.16 cent from a 0.01 cent discount in the previous session.
"There is a big buyer of (the) March/May (spread)," said one US trader.
"Technically, the ranges were narrowing and we began to break away from some recent highs, likely adding to the buy side."
March New York sugar settled up 0.39 cent, or 1.9 percent, at 20.84 cents per lb. In No. 2 producer India, drought in Karnataka and Maharashtra has reduced the amount of cane available to crush and led to the closure of sugar mills earlier than initially expected this season.
"We believe that the recent set of cane crush data from Karnataka and Maharashtra will force a decision regarding the removal of sugar import duty sooner rather than later although India politics may decide the timing of the decision," Tropical Research said in a report on Wednesday.
May white sugar settled up $6.10, or 1.1 percent, at $550.30 per tonne, with traders noting volume was boosted by position rolling from March into May.
March London cocoa closed flat at 1,686 pounds a tonne after falling to a contract low at 1,676.
March New York cocoa settled up $6, or 0.3 percent, at $2,109 per tonne.