Arabica coffee makes biggest jump in five weeks

Arabica coffee futures on ICE rose on Tuesday, marking their biggest one-day rally in five weeks as market participants holding short positions took cover in risk-averse dealings after US stock indexes slumped, traders said. London cocoa futures tapped a two-month high, buoyed by the weak British pound, while sugar turned lower.
March arabica coffee settled up 3.05 cents, or 2.6 percent, at $1.2285 per lb, the biggest one-day rally since January 2. "There was a bit of a risk-off trade this morning with the stock market being down," one US trader said, adding that risk-averse dealings were causing speculators to cover their short positions.
"The underlying fundamentals in soft commodities are negative. The only thing positive about sugar and coffee right now is that the funds have big short (positions)," the trader said. "The specs are short so I'm sure they're pulling out," said Jack Scoville, a vice president with Price Futures Group in Chicago, pointing to strong technical support around $1.18-$1.19. Total open interest rose by 4,947 contracts to a record 251,296 contracts on Monday, ICE data showed.
A Reuters poll on Monday forecast slightly higher coffee prices by the end of the year as countries restock inventories. March robusta coffee settled up $24, or 1.4 percent, at $1,804 per tonne.
Coffee stocks held in European ports fell 5.3 percent in December, figures from the European Coffee Federation showed. March London cocoa settled up 5 pounds, or 0.3 percent, at 1,462 pounds per tonne after peaking at a two-month high of 1,481 pounds.
May New York cocoa settled down $9, or 0.4 percent, at $2,065 per tonne. Cocoa prices should rise by the end of the year, recovering some ground after two consecutive annual declines, a Reuters survey showed.
March raw sugar settled down 0.06 cent, or 0.4 percent, at 13.84 cents per lb, after rising to 14.04 cents, the highest since January 16. Total open interest fell sharply on Monday to 939,360 contracts, down from the prior session's 10-year high at 952,483 contracts, ICE data showed.
Dealers said the run-up had been largely fueled by short covering but a major industry conference in Dubai this week had reinforced concerns about excess supplies. India is likely to continue exporting sugar in the 2018-2019 season, said Abinash Verma, director general of the Indian Sugar Mills Association.
May white sugar settled down $2.40, or 0.7 percent, at $361.90 per tonne.