Arabica coffee and raw sugar futures once again turned higher on Thursday, returning near the multi-month highs hit earlier this week on assessments of crop losses in the top grower of both commodities, Brazil. Cocoa on ICE Futures US and Liffe were firm.
A local government study and comments by a big exporter added to market fears that Brazil has suffered losses of up to 15 percent of its coffee crop due to dry, hot weather since late December. May arabica coffee futures on ICE edged up 1.15 cents, or 0.7 percent, to $1.7885 per lb by 12:18 pm EST (1718 GMT), just below Tuesday's 16-month high of $1.8125. Total volume exceeded 17,300 lots, which was subdued compared with the heavy daily volume often exceeding 60,000 lots during this one-month rally. Dealers said heavy commercial selling from Brazil weighed on arabica futures earlier. The market turned higher when this selling dried up and some roasters entered as buyers.
The contract is on track to finish February up 40 percent, its biggest monthly surge since 1994, stoked by drought-damage concerns in Brazil. Robusta coffee prices have been tracking the arabica market to some extent, with the market rising around 20 percent since the start of the year, compared with arabica's 50 percent gains. Front-month March futures widened to a $70 per tonne premium over May ahead of the contract becoming deliverable on March 1. The previous session had closed with March at a $25 premium. "It's the usual last-minute short covering," a London-based broker said, adding the move was based on a small volume of activity. Liffe May robusta coffee futures were up $39, or 2 percent, at $2,035 per tonne.
Raw sugar futures on ICE were firm, with March up 0.2 cent, or 1.2 percent, at 17.49 cents a lb, after peaking at 17.77 cents on Tuesday, the highest price for the front month since November 2013. Open interest dropped by 8,635 lots to 11,825 lots on Wednesday ahead of expiry Friday. The most-active May contract rose by 0.38 cent, or 2.2 percent, to 18.05 cents. May white sugar futures on Liffe were up $7.90, or 1.7 percent, at $483.90 per tonne.
In cocoa, May futures on Liffe closed up 10 pounds, or 0.5 percent, at 1,837 pounds a tonne. Traders said the options expiry due on Friday had temporarily distracted the market from fundamentals, which point to a global deficit in 2013/14. May cocoa futures on ICE closed up $23, or 0.8 percent, at $2,955 a tonne, just below its highest level since September 2011 reached last week at $3,002 a tonne.