February 8, 2018 / 12:34 PM / 3 months ago

SOFTS-Arabica coffee slips as Brazil currency, producer hedging weigh

LONDON, Feb 8 (Reuters) - Arabica coffee futures on ICE fell on Thursday, weighed down by currency pressures and producer hedging, while New York cocoa rose and raw sugar eased.

COFFEE

* March arabica coffee was down 1.20 cents, or 1 percent, at $1.2210 per lb by 1215 GMT, after slipping to a session low of $1.2175.

* Dealers said a recent speculative rally in the market had brought out fresh selling by Brazilian producers, who remain significantly under-hedged.

* Prices were also weighed down by a weakening in the Brazilian real, which improves local currency returns on dollar-traded commodities like coffee and encourages more selling.

* “The Brazilians have been a seller, with the real slipping back,” said one dealer.

* March robusta coffee was down $3 or 0.2 percent at $1,783 a tonne.

* Dealers said funds rolling short-positions forward was supporting the spread, with the March contract moving to its largest premium over the May position since February 2017.

* “That’s the big technical funds rolling forward, so that inversion has helped keep robusta prices generally steady,” the dealer said.

* However, dealers pointed to pressure from Vietnamese producer selling, although hedging was expected to slow during the upcoming Tet holiday.

* “They’ve still got a lot to do,” the dealer said, estimating Vietnamese farmers sold forward up to 30 percent of their crop. “It’s a healthy crop and they’ve done a lot - but it doesn’t mean they haven’t got more to do.”

* Vietnam, the world’s top robusta producer, is expected to export 120,000 to 130,000 tonnes (2.0 million-2.2 million 60-kg bags) of coffee in February, traders said on Thursday.

COCOA

* March New York cocoa rose $23 or 1.1 percent to $2,060 a tonne, recovering some of the prior session’s losses.

* Prices climbed on Wednesday but sharply reversed course after the U.S. dollar surged higher.

* Dealers pointed to speculative short-covering in light volume and a more muted dollar as key supportive factors on Thursday.

* The mood in the market has also recently improved on signs that port arrivals in top grower Ivory Coast could be slowing down.

* May London cocoa was up eight pounds or 0.6 percent at 1,470 pounds a tonne, with gains in that market muted by a stronger British pound.

SUGAR

* March raw sugar was down 0.04 cent, or 0.3 percent, at 13.96 cents per lb.

* March white sugar fell $0.40, or 0.1 percent, to $360.60 per tonne. (Reporting by Ana Ionova; Editing by Edmund Blair)

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