Arabica coffee futures rallied on Friday as speculative buying lifted prices after a dramatic drop a day earlier, while raw sugar touched a fresh 16-month low and a weaker dollar helped New York cocoa snap a six-session rout. September arabica coffee was up 3.80 cents, or 3.26 percent, at $1.203 per lb by 1408 GMT as prices rebounded following a sharp drop in the previous session.
The contract tumbled more than 5 percent on Thursday as chart-based selling dragged prices to a 16-month low and pushed arabica's premium over robusta to the smallest since at least 2008. Traders said the market was technically oversold on Friday, which lent chart support and inspired some corrective buying. "The specs have just been aggressively selling," said one dealer. "Technically, we're due for a bit of a bounce. But how far do we bounce and is it going to get slammed down again is anyone's guess."
Lack of origin selling by producers was also lending some support. However, appetite from roasters remained lacklustre, dealers noted, as they sit on sufficient nearby coffee supplies. "The industry is not panicking, they've got very good paper coverage," said one dealer. "That's the problem we've got at the moment." September robusta coffee rose $14, or 0.69 percent, to $2,044 a tonne.
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