Robusta coffee, sugar and cocoa futures all ended higher on Tuesday as the markets began to recover from the steep losses of the last few days, but the focus remained firmly on turmoil in global financial markets. "The (coffee) market is marking time to see what will move out of financial markets," one dealer said, referring to the prospect of a Fed rate cut later on Tuesday.
May coffee ended up $4 at $2,444 a tonne. The contract had fallen more than $400 from Friday's high of $2,811 to a low on both Monday and Tuesday of $2,410 on a wave of fund long liquidation. Dealers noted prices remained substantially above end-2007 levels with coffee up 28 percent, cocoa 38 percent and sugar 7 percent. They saw the setback as a correction in a bull market.
Vietnam coffee's discount to London futures narrowed this week as exporters sought to limit losses from falling prices, traders said on Tuesday. They expect sales to rise soon if prices show no improvement. White sugar futures also ended higher, boosted partly by gains in the crude oil market. Sugar can be used to make biofuel ethanol and sometimes tracks trends in the oil market.
May finished $10.40 a tonne higher at $338.30 a tonne. It remains, however, far below a 15-month high for the front month of $400.00 set earlier this month. "People have one eye on what is happening in other markets," one dealer said. "This is a modest bounce at this point." Cocoa futures also finished higher, rebounding from early losses in late trade.
July ended 5 pounds higher at 1,460 pounds a tonne, well above its early low of 1,403 pounds but more than 100 pounds below a 5-1/2-year peak for the second month of 1,567 pounds set less than a week ago.
"The market is still nervous about what is going on in the financial world," one cocoa dealer said. There was a muted reaction to news that dock workers in Ivory Coast on Tuesday suspended a week-old strike over pay that had blocked cocoa and coffee exports.