Arabica coffee futures on ICE slipped on Wednesday, as a weaker currency in top-grower Brazil dragged the spot contract to its lowest levels in nearly two months, while raw sugar also fell. March arabica coffee settled down 1.55 cent, or 1.5 percent, at 98.90 cents per pound, after dipping to 98.65, its lowest since Dec. 19.
The Brazilian real weakened while the US dollar strengthened, putting downward pressure on arabica prices, said Jack Scoville, vice president at Price Futures Group in Chicago. A weaker real can encourage producer selling of dollar-denominated commodities, like coffee and sugar.
Nestle will sell Starbucks-branded coffee at grocery stores and online in Europe, Asia and Latin America from this month as it seeks to increase its lead over rivals such as JAB. Italy's Massimo Zanetti Beverage said it had signed a deal to buy Portugal's Cafes Nandi in a move to boost coffee production in the country. Arabica coffee prices will rise by the end of 2019 as the market swings into deficit, a Reuters poll showed.
May robusta coffee settled down $1, or 0.1 percent, at $1,534 per tonne. March raw sugar settled down 0.10 cent, or 0.8 percent, at 12.75 cents per lb, after trading entirely within the previous session's range. The March contract's premium over May narrowed to settle at 0.17 cents, after matching the previous session's high of 0.22 cents.
Futures remain rangebound while uncertainty over how much sugarcane Brazil will devote to the sweetener versus ethanol persists, dealers said. Brazilian sugar and ethanol company Sao Martinho believes below-average rains in December and January could prevent a production increase next season.
Total open interest dropped by 22,808 contracts to 904,601 contracts on Tuesday, ICE data show, indicating the previous session's gains were in part on short-covering, dealers said. Mexican sugar firm Sucroliq said it expected Mexico to produce 6.2 million tonnes of sugar in the 2019 season, with a 2.1 million-tonne surplus.
March white sugar settled up $6.20, or 1.9 percent, at $332.00 a tonne after setting a four-month low of $323.40 the previous session. The contract expired on Wednesday. May New York cocoa settled up $17, or 0.8 percent, at $2,287 per tonne, after touching a two-week high of $2,310.
May London cocoa settled up 6 pounds, or 0.4 percent, at 1,714 pounds per tonne. More downpours are needed to strengthen Ivory Coast's April-to-September cocoa mid-crop despite above-average rains in most growing regions last week, farmers said.