Coffee extends rally; New York cocoa up

03 Jun, 2015

Coffee futures on ICE rose for the fifth straight session on Tuesday, buoyed by a crop report viewed as bullish and the strengthening currency in top grower Brazil, while New York cocoa broke a six-day streak of declines on support from currency. Raw sugar futures rose for the fourth straight day, also supported by the Brazilian real's strength against the US dollar, while the nearby July/October spread has narrowed to the smallest discount since July 2014.
Arabica futures extended gains on support from a Neumann Kaffee Gruppe report that pegged top grower Brazil's 2015/16 coffee crop at 47.3 million bags, at the lower end of the range of estimates and down from this year. The trade house also forecast a smaller global deficit. Some traders viewed this as bullish, noting that some are expecting a surplus.
Brazil's currency rose for the second straight day, attracting speculative buying, traders said. July arabica coffee settled up 2.9 cents, or 2.2 percent, at $1.3270 per lb, below the session high at $1.34. It had rallied 4.7 percent on Monday. July robusta closed up $24, or 1.4 percent, at $1,723 a tonne, rising for the fifth straight session above last week's 1-1/2-year low. Rabobank analyst Carlos Mera said farmers in top robusta grower Vietnam were still waiting for higher prices.
Cocoa futures rose, with the New York market outpacing gains in London on support from the firm British pound, which attracts buying of the dollar-traded commodity. New York July cocoa settled up $59, or 1.9 percent, at $3,112 per tonne, while July London cocoa closed up 17 pounds, or 0.8 percent, at 2,111 pounds a tonne. The market shrugged off Cocobod's downward revision of No. 2 cocoa producer Ghana's 2014/15 crop by 100,000 tonnes to 750,000 tonnes, as even smaller estimates are already worked into prices.
Raw sugar futures firmed. Support came from a strong allocation to ethanol from Brazilian cane, tightening near-term availability of sugar. "We keenly await the soon-to-be-released Unica (Brazil cane) figures, which many seem to expect to show an improvement for the second half of May from the first half of May," said Thomas Kujawa, co-head of the softs desk at Sucden Financial Sugar. July raw sugar on ICE finished up 0.07 cent, or 0.6 percent, at 12.32 cents a lb, while August white sugar on ICE ended up $1.60, or 0.5 percent, at $355.00 per tonne.

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