Coffee prices rose on Friday, with the robusta market focused on the widening premium for May over July, reflecting concern about how much coffee will be available for delivery. Sugar prices also advanced as the market eyed the impact of rains on crop prospects in top producer Brazil while commercial buying helped cocoa futures close strong. Dealings were light across the board.
"(Robusta) certified stocks will go up fairly substantially if the premium stays," one dealer said. NYSE Liffe data issued on Thursday showed a fairly modest rise in certified robusta stocks during the two weeks to March 21. "We believe that the plentiful supply of robusta beans will lead to a fall in robusta prices in the medium term while in the short-term, the high price level of arabica will prevent this," Commerzbank said in a market note.
May robustas rose $35 to settle at $2,604 a tonne. May robusta's premium to July rose to around $180 a tonne at one stage before closing at $162, still up from around $120-140 on Thursday, although it remained shy of its peak late last week of more than $200. Dealers said a large trade house or fund is believed to be building up a large long position and already holding a substantial portion of certified exchange stocks.
The large premium has already begun to attract coffee from origin with March exports from top robusta producer Vietnam exceeding expectations. Sugar prices were higher as the market eyed the crop outlook in top grower Brazil, and were lifted by investor buying. The sweetener got an added boost from news ethanol mills are starting the crush of Brazil's center-south cane crop a week ahead of the official start, dealers said.
May whites on Liffe rose $5.70 to end at $711.80 a tonne. Cocoa futures also advanced as the market kept a close watch on the conflict in top grower Ivory Coast, but commercial buying helped give the market a lift. Liffe climbed 35 pounds to close at 2,109 pounds a tonne.