Arabica coffee futures on ICE surged 6 percent on Friday as top grower Brazil's firming currency attracted investor buying, while Liffe robusta soared 3 percent. Both markets had their biggest jumps in a month. Cocoa futures rose with dealers focused on next week's European grind data, which is expected to show modestly higher demand, while the US market was buoyed by May options expiration. Sugar also climbed in line with the firm 19-commodity Thomson Reuters/CoreCommodity CRB Index.
May arabica coffee futures on ICE finished up 10.40 cents, or 6 percent, at $1.85 per lb. "I think this rally is driven by specs buying on a lack of selling environment due to the stronger Brazilian real," said Rodrigo Costa, director of coffee at Newedge USA.
Arabica futures have remained volatile but have been trading in a largely sideways range since falling from the two-year high of 2.0755 per lb they hit on March 11. Uncertainty about the extent of crop losses in Brazil, where a January-February drought came as beans were developing, has been keeping Arabica range-bound. Kash Kamal, research analyst at Sucden Financial, said: "With a lack of clarity on direction, and momentum indicators unable to offer any significant insight, we expect further consolidation between $1.70-$1.80 per lb." Though both coffee markets surged on Friday, arabica's rise was stronger and lifted its premium above robusta by 8.4 percent to around 88 cents per lb, the highest since March 18.
"I know Vietnamese (robusta) exports are up the last couple of months, but we were supposed to be flooded with coffee from there this year and we really are not," said Jack Scoville, broker at The Price Futures Group in Chicago. July robusta coffee futures on Liffe settled up $58, or 2.9 percent, at $2,072 a tonne, as certified stocks dropped by 23 percent to 18,330 tonnes as of March 31. That was the lowest since February 2009.
"From what it looks like, Vietnam could be susceptible to below normal rainfall beginning of May and the market needs to watch that closely," said Mark Nucera, president of M.A. Nucera, an Atlanta consulting firm, referring to the El Nino weather phenomenon that may come "quicker than anticipated". Nucera trades robusta futures for his family account.
Cocoa also jumped as traders focused on European grind data, a measure of demand, due on April 10. North American data is set for April 17. July cocoa on Liffe settled up 25 pounds, or 1.3 percent, at 1,877 pounds a tonne. May cocoa on ICE rose $49, or 1.7 percent, to end at $2,966 a tonne, supported by the expiration of the May options contract at the end of the session. May raw sugar futures on ICE gained 0.17 cent, or 1 percent, to close at 17.35 cents a lb, while July rose 0.18 cent, or 1 percent, to end at 17.79 cents. May white sugar futures on Liffe closed up $3.70, or 0.8 percent, at $463.90 a tonne.