London robusta coffee futures finished mostly lower on Wednesday on origin, trade and speculative selling as the market's recent strong advance finally stalled, dealers said.
Cocoa futures ended slightly lower, weakened by sterling's firmness against the dollar, while white sugar finished with modest gains with business dominated by rolling forward of positions out of the front month.
Dealers said the coffee market's prolonged upward trend, which has been driven by a supply squeeze on November, had appeared to have at least temporarily run out of steam. January ended $21 lower at $1,949 a tonne, well below a fresh contract high of $1,997. "We failed at $2,000 on January and then we had Vietnamese and trade selling which led to speculative liquidation," one dealer said.
November settled unchanged at $2,435 after setting a fresh contract high of $2,495 earlier in the day. The front month's premium set a new high of around $510 during morning trading but was finally indicated around $475, up from about $465 at the close on Tuesday.
Some dealers believe the supply squeeze may spill over into the January contract but others argue that a pick-up in new crop shipments from Vietnam will eventually drive prices lower. "It (the market's strength) has all been brought by this squeeze on November and once that is out of the way I wouldn't be surprised if the market comes back 150 or maybe even 200 dollars," one dealer said.
November saw 145 lots tendered on Wednesday, the fifth day of its notice period, euronext.liffe said. All the coffee was bought by Fortis Bank Global Clearing, the receiver of the bulk of the tenders to date.
Cocoa futures ended slightly lower, weakened primarily by the rise in sterling to a 26-year high against the dollar. "I think it is purely based on currency," one dealer said. March ended down 5 pounds at 955 pounds a tonne. Dealers said prices were underpinned by heightened concern about black pod disease in West Africa after recent rains.
A pick-up in hedge selling as new crop arrivals in West Africa gather pace has, however, been weighing on the market. Brazilian 2007/08 (May/April) cocoa arrivals from Bahia and other states totalled 2.09 million 60-kg bags by November 4, down around 10 percent from 2.32 million bags a year ago, Bahia Commercial Association said Wednesday.
White sugar futures finished slightly higher with business dominated by rolling forward of positions out of December into March with the front month due to expire on November 15. December ended $1.60 higher at $278.10 a tonne while March finished up $2.90 at $286.90. Dealers said the recent increase in December's discount to March, which has been linked partly to strong freight rates, had lessened interest in delivering against the front month.
"The weakness in December has been exploited. I think people who maybe were going to deliver are now maybe not. They may just take their profit and roll it forward," one dealer said. High freight rates have made it less attractive to take delivery of physical supplies, increasing the cost of moving the sugar to a consumer.