Arabica coffee futures hit a 2-1/2 month peak on Thursday, rising for the 13th straight session due to tight supplies of high-quality beans although profit-taking knocked prices off their highs. Raw sugar slid as much as 4 percent in the second straight day of a steep correction, with cocoa also reeling from investor sales.
New York's December arabica coffee futures gained 1.75 cents to end at $2.755 a lb, the highest close since June 14. Its session peak of $2.779 was a 2-1/2 month high. But London's November robusta coffee on Liffe dipped $12 to close at $2,362 per tonne. "Coffee is running fairly strong (and) supplies are quite tight," said Sean McGillivray, head of asset allocation at Great Pacific Wealth Management in Oregon.
Most of the focus is on Colombia, the world's top producer of high-quality arabica beans, where poor weather and a tree renovation program cut its coffee output in 2009 and 2010. Coffee growers have forecast this year's output at 9.0-9.5 million 60-kg bags, more than the 8.9 million bags produced last year but below historical averages of more than 11 million bags.
Arabica coffee traded at its highest level since June 3, but the market pared gains on profit-taking and pressure from a weak commodity complex. "Previously there was a bit of concern about the lack of increase in Colombian production as well as the frost conditions in Brazil," said Mu Li, coffee analyst with CPM Group in New York. New York's October raw sugar futures fell 0.52 cent to finish at 29.66 cents a lb, hitting a session low of 28.92 cents. London's October white sugar contract dropped $13.40 to finish at $771.20 a tonne.
Brazil's small sugar crop supported the market. "In the near term, we expect prices to be supported in Q3 on supply downgrades from Brazil but for prices to ease through Q4 and into early next year," Barclays Capital said in a note. US cocoa futures fell after rising nearly 11 percent in the past two weeks, with the key December contract tumbling below the 100-day moving average around $3,062 per tonne. New York's December cocoa contract fell $61, or almost 2 percent, to close at $3,027 per tonne and London's December cocoa futures shed 27 pounds to settle at 1,910 pounds a tonne.