World Agriculture: ICE coffee rises

May 08, 2013

ICE coffee rises
ICE coffee rises

Arabica coffee futures on ICE were firmer on Tuesday, rising from a recent three-year low on investor short-covering, though top producer Brazil’s large upcoming harvest and an overhang of carryover stocks are expected to keep prices under pressure. Cocoa futures on ICE extended losses after falling from last week’s 4-1/2-month high, while raw sugar futures eased, giving back the previous session’s gains but still holding above last week’s multi-year low.

ICE July arabica coffee futures inched up 0.95 cent, or 0.7 percent, to settle at $1.4270 per lb, rising for the fourth straight session after bouncing off a three-year low of $1.3270 last week.

US dealers said the move higher was on short-covering by funds and speculators who have held a large net short position in arabica futures and options for months. Brazil’s government raised its benchmark price for arabica coffee 17 percent during the trading session to 307 reais ($150) per 60-kg bag, the agriculture ministry said, a decision some traders see as sign of imminent government intervention to boost coffee prices. The July arabica contract climbed around 0.5 percent in the 17 minutes following the announcement, revisiting the session high of $1.4290.

Dealers expect low prices to have encouraged Brazilian co-operatives to hold larger than usual stocks from the 2012 crop, as the market waited for the country’s government to announce its benchmark price and potential stock financing help. “The combination of the Brazil minimum price situation and a bit of technical short-covering is making people a bit wary,” said a London-based broker, adding it was doubtful the market would break above $1.45 given the ample supplies available.

July robusta coffee futures on Liffe finished down $10, or 0.5 percent, at $2,010 a tonne. Liffe cocoa futures were slightly higher, trading below Thursday’s five-month high, with good West African mid crop prospects and origin selling expected to limit price upside.

July cocoa on Liffe settled up 3 pounds, or 0.2 percent, at 1,570 pounds a tonne, after touching 1,583 pounds on Thursday, the highest level for the benchmark second month since December 2012. Liffe agricultural markets were closed on Monday for a holiday. Speculators raised a net long position in cocoa futures and options on NYSE Liffe in the week to April 30, exchange data showed on Tuesday.

July cocoa on ICE ended down $6, or 0.2 percent, at $2,396 a tonne, just below Thursday’s five-month high of $2,437. Total open interest rose to 221,328 contracts on May 6, a record high for the fifth straight session, up nearly 12 percent from a month ago and up 24 percent from a year ago, exchange data showed. In raw sugar, July futures dropped 0.17 cent, or 1 percent, to close at 17.64 cents a lb, trimming gains after the market rebounded on Monday from last week’s slide to 17.13 cents, the lowest level for the front month since July 2010. August white sugar on Liffe ended down $2.80, or 0.6 percent, at $494.00 a tonne.

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