Soft commodity markets finished mixed on Wednesday, with coffee and cocoa lower and sugar higher before the US Federal Reserve said it would extend its monetary stimulus programme to help shore up the faltering economy. "We have to look at how effective (any further stimulus) can be," Sterling Smith, vice president of commodity research at Citibank's Institutional Client Group in Chicago.
Arabica coffee fell on profit-taking after rallying more than 4 percent on Tuesday. September arabica futures sank 6.40 cents or by 4 percent to finish at $1.524 per lb. Robusta futures on Liffe eased, with September down $15 to close at $2,086 per tonne.
"Now we seem to be taking a step back," said Keith Flury, a senior soft commodities analyst with Rabobank. "However, Brazilian farmers are not going to be panic selling into a downward market. We are poised for a retracement higher."
Arabicas lost around 3 percent in value after follow-through buying from Tuesday's rally failed to materialise, causing funds and day traders to sell in heavy volume, dealers said. Coffee exports from Central America, Mexico, Colombia, Peru and the Dominican Republic rose 5.8 percent in May from the same month last year, reaching 2.89 million 60-kg bags in the month.
Sugar futures were barely positive, supported by talk of delays in top producer Brazil as rain slowed transporting and harvesting the sugar and caused a backlog in its main ports. Spot July raw sugar futures rose 0.17 cent to finish at 21.74 cents per lb. Key October gained 0.18 cent to close at 20.97 cents.
London August white sugar was up $3.40 to settle at $614.60 per tonne. "Continued rain in center-south Brazil affecting both the crush and loading at port is causing values to reach up and challenge resistance areas set last month," said Nick Penney of brokerage Sucden Financial. July's premium to October remained firm, edging up during the session to 0.76 cent, as dealers eyed wet weather forecasts, which could further delay Brazil's harvest progress.
Dealers talked of delivery expectations when the spot July contract goes off the board at the end of next week. Smith and other brokers said the size of the delivery would depend on the spread between July and now active October. Premiums for Thai J-spec raw sugar stayed at their strongest levels in nearly a year this week, despite a rebound in New York futures, with dealers saying demand from Japanese buyers was limited as they continued to wait for bargains. Cocoa futures finished lower. ICE September cocoa futures slid $66, or almost 3 percent, to finish at $2,169 per tonne. Liffe September cocoa futures fell 29 pounds, or 1.9 percent, to close at 1,494 pounds per tonne.