Arabica coffee futures pared steep gains in heavy volume early on Friday, after concerns eased about the frost in Brazil's coffee belt that lifted the market nearly 5 percent earlier. ICE cocoa futures were firm but well off their steep highs, buoyed by the lower US dollar, while raw sugar fell in line with the weakness of other financial markets as macro worries over economic contagion offset bullish fundamentals, such as the small cane crop in No 1 producer/exporter Brazil.
"A lot of the reaction was because of the unknown effect of the frost in Brazil. It was a little worse and unexpected than the previous one we had earlier this year," said Rodrigo Costa, vice-president of Institutional Sales for Newedge USA. ICE September coffee futures were up 0.65 cent at $2.3650 a lb at 12:44 pm EDT (1644 GMT), well below the session high of $2.4770 a lb.
October raw sugar on ICE eased 0.03 cent to 27.76 cents a lb. Downward revisions to top producer Brazil's cane crop helped push October raw sugar to a contract high of 31.68 cents a lb touched early last week. ICE cocoa futures surged $80, or 2.7 percent, within three minutes in early dealings when the US dollar turned lower, but pared gains as the focus returned to heavy September/December spreading, dealers said. September cocoa on ICE closed up $31, or 1 percent, at $2,936 a tonne after touching $3,005 a tonne earlier.