Arabica coffee futures on ICE slid on expectations for a record “off year” crop in Brazil, and cocoa gained, with dealers monitoring the front month premium on Liffe. July raw sugar futures on ICE Futures US settled down 0.23 cent, or 1.3 percent, to 17.02 cents a lb, after touching 17.00 cents, the lowest price since July 2010. It was the largest one-day loss in almost two weeks. Raw sugar prices have reached fresh lows over the past two sessions as forecasts for hefty output in Brazil began to be realised, dealers said.
Sugar production in Brazil’s main cane belt surged in April, outpacing last year’s early harvest, as rains cleared to allow crushing of the record crop to accelerate, industry association Unica said. “Cane production is up, sugar production is up, and the ethanol mix wasn’t as aggressive as we thought,” said Michael McDougall, vice president for Newedge in New York.
“There is no notable support below these levels, until we hit the 2010 lows of 13 cents (spot contract), which means producers are likely to assess the current market with a fair degree of nervousness,” said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. Traders gathered for New York Sugar Week said they thought it likely global prices would trend toward 16 cents a lb. August white sugar on Liffe was down $7.10, or 1.5 percent, to settle at $478.00 a tonne.
Arabica coffee fell as earlier support from concerns that frost season in Brazil could threaten supplies from the top producer gave way to expectations of record output. ICE July arabica coffee futures fell 1.75 cent, or 1.2 percent, to finish at $1.44 per lb. Brazil’s agriculture ministry forecast a harvest of 48.6 million 60-kg bags of coffee for the 2013/14 crop that begins in late May, the midpoint of a January estimate of 47 million to 50.2 million bags.
“At best, this forecast is in line with trade expectations. Some roasters are in the market, but there’s no real reason to buy the market right now,” said Jack Scoville, vice president of Price Futures Group in Chicago. Liffe July robusta coffee finished down $1, or 0.05 percent, to $2,050 a tonne. Liffe July cocoa futures rose 21 pounds, or 1.4 percent, to finish at 1,568 pounds per tonne.
Dealers eyed the Liffe front month contract May ahead of its expiry on Wednesday. It traded at a 29 pound premium to July, down from 32 pounds during the previous session. The ICE July contract was up $27, or 1.2 percent, to settle at $2,353 a tonne.