Arabica coffee drops under chart pressure, cocoa down

Arabica coffee on ICE Futures US on Friday dropped to the lowest since early January as cocoa futures also fell while raw sugar prices continued to recover from Wednesday's 10-month low. May arabica closed down 2.9 cents, or 2.06 percent, at $1.376 per lb, settling near the session's 2-1/2-month low of $1.371.
Prices lost support once they slipped below the psychological $1.40 level, which eroded chart-based support and triggered fund liquidation, dealers said. "What low will we test? That's the question on everyone's mind," said one dealer. "We've been down here so many times. But if the funds decide to hammer it further, it's possible."
May robusta followed, settling down $24, or 1.11 percent, at $2,139 per tonne.
Robusta coffee exports were 4.7 percent higher in February, from a year earlier, at 3.56 million bags, figures from the ICO showed on Friday. May New York finished down $45, or 2.07 percent, at $2,131 per tonne. May London settled down 36 pounds, or 2.06 percent, at 1,714 pounds per tonne.
Both markets rallied earlier in the week on a wave of short-covering after prices had hit multi-year lows. The upside, however, is seen as limited because of plentiful supplies, with a large global surplus expected in the current season. May raw sugar settled up 0.11 cent, or 0.62 percent, at 17.71 cents per lb after rallying over 2 percent.
A strong close the previous session lent support, helping prices to extend the recovery from 10-month lows touched earlier in the week. Dealers said, however, that technical support remained fragile and prices could slip again if prices struggle to hold above key resistance levels.
"Yesterday's activity has failed to change the outlook in the near term, with the indicators still heavily in favour of the downside," Sucden Financial said in a note.
Gains were also limited by bearish fundamentals, with favourable weather in Brazil adding to expectations for a surplus in the 2017/2018 season. India is also likely to emerge unscathed from the El Nino weather phenomenon, which is now expected to arrive in the latter part of the monsoon season, the director general of the India Meteorological Department said. May white sugar settled up $2.2, or 0.44 percent, at $501 per tonne.