Arabica coffee futures on ICE rose on Thursday, boosted by fund short-covering, while raw sugar fell as ample global supplies remained in focus. July arabica coffee settled up 0.6 cent, or 0.5 percent, at $1.2435 per lb, but remained below the prior session's highest level since February at $1.2595.
The contract was on track to close higher for its second straight week on short-covering by speculators, who hold a large net short position in futures and options, traders said. However, gains were capped by expectations that Brazilian producers will soon begin to hedge a massive crop, especially given the recent weakening in the currency, which improves their local currency returns. "The more the real weakens, the better this level is for Brazil," said one dealer. "So you can expect them to come in and hedge. But the funds are likely to protect their short as well, so I don't expect a further rally."
July robusta coffee settled up $24, or 1.3 percent, at $1,831 per tonne. May robusta briefly flipped to a small premium over July from last week's $33 discount, though the spread settled flat on Thursday.
Meanwhile, physical differentials have weakened recently, with one dealer pegging the discount for Vietnam beans and Brazil new-crop conillon at roughly $100 per tonne. July raw sugar settled down 0.06 cent, or 0.5 percent, at 11.69 cents per lb.
Prices fell sharply in the prior session in tandem with white sugar, after India approved plans to subsidize its cane farmers, which could pave the way for exports to the world market.
Focus remained on a global supply glut, with commodity analyst Green Pool forecasting a combined sugar surplus of almost 25 million tonnes for the 2017-18 and 2018-19 seasons. August white sugar settled down 30 cents, or 0.1 percent, at $323.50 per tonne.
July London cocoa settled up 11 pounds, or 0.6 percent, at 1,940 pounds per tonne. July New York cocoa settled up $28, or 1 percent, at $2,841 per tonne.
The rare New York July premium over London July rose back above $200, near Tuesday's 41-year high around $240.