Robusta coffee futures rallied on Monday as worry that rains will slow harvesting in top grower Vietnam lifted prices further from a more than three-year low, and ICE cocoa jumped to a two-year high on concerns that world supplies will not meet demand. Raw sugar rose in light trading volumes as a move toward an oversold condition drove short-covering, and Liffe white sugar gained following a modest exchange delivery.
Global financial markets rallied on signs of ambitious economic reform in China and continued loose monetary policy in the United States. The US dollar was down against a basket of global currencies, boosting buying of dollar-traded commodities as it makes them less expensive to holders of other currencies. Liffe January robusta coffee futures rose $55, or 3.6 percent, to $1,566 a tonne by 12:30 pm EST (1730 GMT), posting huge gains for a second straight session and climbing further from a more than three-year low of $1,431 set earlier this month.
"The move reflects concerns that the rains in Vietnam have probably affected drying of the crop and knocked some cherries off trees," said Stephen Platt, an analyst at futures brokerage Archer Financial Services. The harvest resumed on Monday after rain delays over the weekend, with heavy cloud cover expected to hamper drying of beans in the coming days.
The most-active March arabica coffee contract on ICE Futures US gained 0.55 cent, or 0.5 percent, at $1.0965 per lb, supported by London's gains and a drop in green coffee stocks. The second-month contract set a nearly five-year low of $1.0415 on November 6 as huge global supplies and expectations of another bumper crop in top arabica grower Brazil drove selling and kept buyers on the sidelines.
ICE March cocoa futures closed up $50, or 1.8 percent, at $2,780 a tonne and set a fresh two-year high of $2,784 in moderate volumes as worries over global supplies and expectations of a deficit drove buying. Second-month prices have gained in each of the last five sessions after touching a nearly six-week low of $2,576. "We had a break (lower), but now we're coming back on this attitude that we're looking at deficit situation and the demand side prospects are pretty good," said Archer Financial's Platt.
Showers are expected to continue in Ivory Coast and may disrupt harvesting in the world's top grower, US-based MDA Weather Services said in report. March cocoa on Liffe was up 26 pounds, or 1.5 percent, to finish at 1,766 pounds per tonne. In sugar, the front-month March raw sugar contract on ICE rose 0.18 cent, or 1 percent, to 17.73 cents a lb.
Spot prices were on track for their first daily gain in six sessions on technically-driven short-covering, after the recent slump left them near oversold conditions and support at Friday's six-week low of 17.50 cents a lb. "We believe this is merely a rally correcting the oversold condition and expect more selling as we approach the 18 cents area," said Nick Penney of brokerage Sucden Financial Sugar.
Speculators have begun to dial back a huge bullish position in raw sugar contracts on renewed concerns over huge global supplies, US government data showed on Friday. March white sugar on Liffe was up $4.70, or 1 percent, at $469.00 a tonne. On Friday, the spot contract hit a more than three-year low of $445.70, reflecting weak demand and plentiful supplies.
NYSE Liffe said on Monday that a modest 833 lots, or 41,650 tonnes of white sugar, had been tendered against the expiry of the December contract, above traders' estimates on Friday. ADM was the sole buyer, with destinations expected in North Africa or the Middle East.