London coffee futures rose to their highest in three weeks on Thursday as speculative buyers created fresh momentum in technical trade, while sugar futures languished near 26-month lows, pressured by hefty supply. Speculative activity was also seen in cocoa futures, with the benchmark December position hitting a two-week peak.
Robusta coffee futures gained in brisk volume as speculative buying gathered momentum after technical resistance at $1,790 was breached on the benchmark November position, triggering automatic buy orders, dealers said.
Strength on November helped widen the November-January spread with the former month now at a premium of roughly $50, up from around $33 on Wednesday - raising talk of a possible squeeze. Benchmark November ended up $30 at $1,800 on volume of 79,494 lots, having hit a near three-week high of $1,816 earlier.
"November-January and November is the focus point of attention for the specs - it's got a bit of a head of steam on it. We are seeing muscle flexing from a fund or two," one dealer said. Spec selling kept London white sugar futures under pressure, having hit a 26-month low for the front month on Wednesday. "Technically the market looks like a piece of dirt - the technical picture seems to have taken over. There might be a bit of spot demand holding up the front month position as the October-December spread has tightened but the rest of the board is getting hit," a dealer said.
October ended down 70 cents at $273.00 per tonne, having hit a 26-month low of 270.00 on Wednesday. Sentiment has been weighed by a supply glut caused by bumper crops in Brazil and India. Dealers saw support in October around $240.00-245.00. On the output front, Germany is likely to produce about four million tonnes of white sugar from beet in the current 2007/08 season, up from 3.3 million tonnes in 2006/07, the country's Agriculture Ministry said on Thursday.
London cocoa futures gained, as speculative buying activity offset expectations for a large 2007/08 West African main crop. December ended up 17 pounds at 969 pounds. Brazilian 2007/08 (May/April) cocoa arrivals from Bahia and other states totalled 1.28 million 60-kg bags by September 2, down 26 percent from 1.75 million bags a year ago, Bahia Commercial Association said.