June 17, 2014 / 11:59 AM / 6 years ago

SOFTS-ICE cocoa climbs towards near 3-year high, coffee down

* Higher cocoa prices could create future surplus

* Risk premium seen in arabica coffee price

By Sarah McFarlane

LONDON, June 17 (Reuters) - ICE cocoa futures nudged towards a near-three year high on Tuesday, with rising prices expected to help switch the market into surplus in coming years from a current deficit.

Coffee prices eased, underpinned by concerns over top grower Brazil’s crop, while sugar prices were little changed.

In cocoa, ICE’s September contract traded up $10, or 0.3 percent, at $3,116 a tonne at 1135 GMT, below last week’s near three-year peak of $3,125, the market’s highest level since September 2011.

Cocoa traders and chocolate makers expect a second consecutive global cocoa deficit in 2013/14.

“From 2015/16 onwards we won’t have a structural deficit if the price remains at $3,000 a tonne or higher and any significant increase in prices from here will probably consign us to surpluses from 2015/16 onwards,” said Jonathan Parkman, joint head of agriculture at broker Marex Spectron.

Liffe September cocoa was up 5 pounds, or 0.3 percent, at 1,941 pounds a tonne.

The Liffe July contract traded at a 26 pound per tonne premium to September LCC-1=R after trading as wide as 46 pounds last week.

“This is a technical situation. There’s no shortage of cocoa in Europe,” Parkman said.

“We had undeniable demand for beans from Asian factories, the response to that was that the structure became backwardated in London.”


Arabica coffee trimmed recent gains, after rallying higher last week, with attention focused on the size of Brazil’s crop after a drought earlier this year.

September arabica futures on ICE fell 1.15 cents, or 0.7 percent, to $1.7465 a lb.

“It’s a question of the outlook on Brazil and how bad the impact is of the weather conditions we had over Q1,” a European analyst said.

“Coffee prices will continue to include some kind of risk premium due to concerns over the 2015/16 crop.”

Stocks should be adequate to meet any shortfall in supply, the analyst added.

Liffe’s London-based robusta coffee for September traded down $20, or 1 percent, at $1,979 a tonne.

In sugar, ICE futures edged 0.02 cent, or 0.1 percent lower, to 17.08 cents a lb, under pressure from heavy world stocks.

“We still have a lot of sugar, so prices are probably going to stay relatively near the low end of their recent range,” said the analyst.

Over the past three months raw sugar has rarely broken out of its range of around 17 cents per lb to 18.5 cents.

Prices could pick up towards the end of the year as the market shifts its focus to expectations for the market to switch to deficit after several years of surplus, the analyst added.

Liffe August white sugar rose 80 cents, or 0.2 percent, to $467.60 a tonne. (Editing by William Hardy)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below