Arabica coffee touches 20-month peak; sugar, cocoa fall

 Arabica coffee futures rose to a 20-month peak on Thursday and robusta matched the prior day’s two-year high, supported by strong charts and expectations of tight nearby supplies, while sugar and cocoa retreated.

Investors have piled into the coffee markets this month as rains in top robusta grower Vietnam and dry weather in robusta-growing regions of Brazil, the world’s largest coffee producer, have stoked worries over supplies.

The January robusta coffee contract on ICE Futures Europe matched Wednesday’s high of $2,188 before finishing down $3, or 0.14 percent, at $2,175 per tonne as buying lost steam. The second-month has surged over 8 percent this month after last month’s rally of nearly 10 percent.

Rain in recent weeks has delayed the maturing process of coffee cherries in the Central Highlands of Vietnam, the world’s biggest robusta producer, raising concerns over supply in the next few weeks.

Robusta concerns have spilled over to the arabica market. ICE December arabica coffee settled up 1.1 cent, or 0.67 percent, at $1.648 per lb after touching a 20-month high of $1.6640 per lb, the highest for the front-month since February 2015.

Arabica has blown through what traders saw as near-term resistance around $1.60, $1.65 and $1.66 in the last week, fueling investor interest.

“Coffee looks like it’s on a mission to go higher. We took out major resistance to the upside,” said Stephen Platt, analyst at futures brokerage Archer Financial Services.

In sugar, ICE raw futures eased on currency-driven selling and from fund rolling, as traders liquidated out of the front-month.

March raw futures finished down 0.08 cent, or 0.35 percent, at 22.59 cents per lb. ICE December white sugar settled up $1.1, or 0.18 percent, at $596.8 per tonne.

A weaker real contributed to the pressure. The weaker real encourages selling of dollar-traded commodities, as it makes them more valuable in local currency terms.

The March-May spread SBH7-K7 finished at 0.56 cent per pound, down from a September peak of over 1.02 cents as traders rolled forward.

Raw prices have slumped over 5 percent from September’s four-year high of 23.90 cents per lb.

Cocoa prices fell amid reports of favourable weather from top producer Ivory Coast and estimates from exporters that the coming crop will be larger than the previous one.

ICE March London cocoa closed down 5 pounds, or 0.23 percent, at 2,194 pounds per tonne.

ICE March New York cocoa finished down $28, or 1.05 percent, at $2,632 per tonne.


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