ICE raw sugar and arabica coffee futures fell on Friday, remaining near recent three-year lows, as both tracked Brazil's weakening real and came under pressure from ample supplies in the top producing country. Cocoa on ICE Futures US edged up in technically driven dealings to post its steepest weekly gain since August.
Dealers said foreign-exchange fluctuations had been driving sugar and arabica prices throughout the week, and both were stuck in long-term downward trends linked to plentiful supplies and bearish technical signals. The Brazilian real sank against the US dollar after Standard & Poor's revised its outlook on long-term ratings for Brazil's sovereign debt to negative from stable on Thursday.
The weakening of the real boosts incentives for Brazilian producers to sell dollar-traded commodities, dealers said. July raw sugar on ICE inched down 0.05 cent, or 0.3 percent, to settle at 16.43 cents a lb, slipping 0.7 percent from last Friday's close to post its fifth straight weekly loss. The front-month contract dipped on Tuesday to 16.32 cents, its weakest level since July 2010.
On Liffe, August white sugar was down $1.10, or 0.2 percent, to finish at $481.40 a tonne. "Everyone is agreed on just how big the overall size of the crop in Brazil is. The most important thing to figure out now is the dollar-real," a US broker said. Trading was mixed, with volumes heavy amid fund rolling and spread-related activity, dealers said. Credit Suisse analyst Tobias Merath said there were similarities between raw sugar and arabica.
"We would rate both markets as still negative. The downtrend has probably not run its course yet," he said. July arabica futures on ICE closed down 2.5 cents, or 1.9 percent, to $1.2695 per lb, not far from a more-than-three-year low of $1.2505 touched last week. Prices edged down 0.1 percent from last Friday's close to see a fourth straight weekly loss. Prices came under added pressure after data released on Thursday showed Brazil's exports of unroasted green coffee were up 22 percent last month compared with May 2012.
September robusta coffee fell $18, or 1 percent, to close at $1,863 a tonne. July cocoa on ICE edged up $1, or 0.04 percent, to finish at $2,364 a tonne. The front-month contract posted a weekly gain of 8 percent on technical strength as prices surpassed resistance levels, dealers said.
Profit-taking capped Friday's gains, dealers said. Rolling forward of positions out of July into September and spread-related trading had contributed to extremely heavy volume in the last few days. September cocoa futures on Liffe closed down 3 pounds, or 0.2 percent, at 1,560 pounds a tonne.