Soft commodity futures were choppy on Friday, with arabica coffee sinking to near an 18-month low before speculator short-covering hoisted it back into positive territory. Sugar ended down and cocoa futures settled higher, with volume in New York soft commodities running from almost 10 percent to a third under the 30-day norm, Thomson Reuters data showed.
May arabicas on ICE dove to a session low of $1.7525 per lb, the lowest for the benchmark spot arabica contract since October 2010, but rebounded to close 1.80 cents higher, or 1.02 percent, at $1.7875 per lb. Benchmark Liffe May robusta coffee futures rose $25 or 1.25 percent to finish at $2,033 per tonne. "The idea of global (coffee) supplies remaining good is weighing on the market," said Country Hedging Inc senior analyst Sterling Smith. Stefan Uhlenbrock, analyst with Germany-based F.O. Licht, sees a downside price risk to arabicas due in part to expectations of a big crop in top producer/exporter Brazil.
Smith said arabica values are "in a stair-step pattern going down to $1.50, $1.40" in the weeks ahead. "I do not see the market rebounding significantly," Uhlenbrock added. Commodity firm Olam International's managing director for coffee, VivekVerma, told Reuters the downside in arabicas should be limited with global supply and demand expected to be balanced until mid-2013. Raw sugar approached the three-week top of 26.20 cents before falling back when producer and investor sales stepped up.
"The lack of momentum...does give the bulls cause for worry," said Smith, adding that given the bearish fundamentals going forward the sweetener is "exceptionally vulnerable to profit-taking." New York's May raw sugar contract hit a session top of 26.13 cents per lb, then fell. The contract dropped 0.28 cent to finish at 25.63 cents per lb.
London May white sugar futures lost $3.30 to close at $659.70 per tonne. One senior dealer said he expected the Commitments of Traders report later on Friday to show funds had extended their long position to around 6.5 million tonnes. May cocoa on ICE climbed $22 or almost 1 percent to end at $2,307 per tonne. London May cocoa increased 13 pounds, or 1.01 percent, to conclude at 1,492 pounds per tonne.