May 3, 2018 / 5:54 PM / a year ago

SOFTS-Arabica coffee climbs on fund buying, raw sugar slips

 (Updates throughout; adds comment, NEW YORK dateline)
    NEW YORK/LONDON, May 3 (Reuters) - Arabica coffee futures on
ICE rose on Thursday, boosted by fund short-covering, while raw
sugar fell as ample global supplies remained in focus. 
    * July arabica coffee        settled up 0.6 cent, or 0.5
percent, at $1.2435 per lb, but remained below the prior
session's highest level since February at $1.2595.
    * The contract was on track to close higher for its second
straight week on short-covering by speculators, who hold a large
net short position in futures and options, traders said. 
    * However, gains were capped by expectations that Brazilian
producers will soon begin to hedge a massive crop, especially
given the recent weakening in the currency, which improves their
local currency returns.       
    * "The more the real weakens, the better this level is for
Brazil," said one dealer. "So you can expect them to come in and
hedge. But the funds are likely to protect their short as well,
so I don't expect a further rally."
    * July robusta coffee         settled up $24, or 1.3
percent, at $1,831 per tonne.
    * May robusta briefly flipped to a small premium over July
LRCK8-N8 from last week's $33 discount, though the spread
settled flat on Thursday.
    * Meanwhile, physical differentials have weakened recently,
with one dealer pegging the discount for Vietnam beans and
Brazil new-crop conillon at roughly $100 per tonne.
    * July raw sugar        settled down 0.06 cent, or 0.5
percent, at 11.69 cents per lb.
    * Prices fell sharply in the prior session in tandem with
white sugar, after India approved plans to subsidize its cane
farmers, which could pave the way for exports to the world
    * Focus remained on a global supply glut, with commodity
analyst Green Pool forecasting a combined sugar surplus of
almost 25 million tonnes for the 2017-18 and 2018-19 seasons.
    * The "very large addition to production has only had a
small offset from the consumption side of the equation, leading
to a blowout in stock levels," the analyst said.
    * August white sugar         settled down 30 cents, or 0.1
percent, at $323.50 per tonne.

    * July London cocoa         settled up 11 pounds, or 0.6
percent, at 1,940 pounds per tonne.
    * July New York cocoa        settled up $28, or 1 percent,
at $2,841 per tonne.
    * The rare New York July premium over London July rose back
above $200, near Tuesday's 41-year high around $240.

 (Reporting by Marcy Nicholson in New York and Ana Ionova in
London; Editing by David Evans and James Dalgleish)
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