Arabica coffee sinks to six-week low as Brazilian real slumps

01 Aug, 2019

NEW YORK/LONDON: Arabica coffee futures on ICE tumbled to a six-week low on Thursday, dragged down by a weaker currency in top-grower Brazil, while raw sugar and cocoa also slipped.

COFFEE

* September arabica coffee settled down 2.4 cent, or 2.4%, at 97.25 cents per lb after slumping to 96.40 cents, its lowest since June 19.

* The market was dragged down by a softer Brazilian real, which hit its weakest against the US dollar in nearly a month.

* A weaker real encourages producer selling of dollar-denominated commodities like coffee and sugar.

* Brazil's currency was weaker on Thursday, a day after the central bank kicked off an easing cycle with a sharper rate cut than most economists expected.

* Total open interest in arabica coffee climbed on Thursday to 285,474 lots, a seven-week high, ICE data show. Dealers expected this to be an indicator that funds were rebuilding a large net short position.

* The contract managed to settle above 96.55 cents, the 62% retracement of the July 8 high and April 17 low, which was a supportive signal, one US trader said.

* Also supporting prices was the possibility of crop-damaging weather this weekend in Brazil. Forecaster Radiant Solutions elevated the threat of frost for Saturday and Sunday in a market note.

* September robusta coffee settled down $31, or 2.3%, at $1,307 per tonne.

* Vietnam's domestic coffee prices edged higher this week on low supplies, but traders said domestic prices would not rise further as the new harvest season would begin soon.

SUGAR

* October raw sugar settled down 0.09 cent, or 0.7%, at 12.12 cents per lb.

* The market was pressured by lower oil prices, dealers said, which can encourage Brazilian cane mills to produce sugar rather than biofuel ethanol.

* An improving weather outlook in major grower India, where monsoon rains were delayed and weak, has also been a bearish influence on prices, dealers said.

* October white sugar settled up $1.60, or 0.5%, at $325.60 per tonne.

COCOA

* September New York cocoa settled down $16, or 0.7%, at $2,329 per tonne, its eighth consecutive negative finish.

* September London cocoa settled down 2 pounds, or 0.1%, to 1,823 pounds a tonne.

* Good weather in top-grower Ivory Coast, which is supporting the development of its October-to-March main crop, has pressured prices, dealers said.

Copyright Reuters, 2019

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