NY coffee hits 6-week high despite producer selling

Tue Sep 11, 2012 3:11pm EDT

Sept 11 (Reuters) - Arabica coffee futures closed higher for
a third straight session on Tuesday as speculative short
covering offset tentative producer selling triggered when prices
hit six-week highs of $1.8 per lb.
    Raw sugar futures were flat as the market moved off intraday
highs after a bearish Brazilian harvest update, while cocoa
futures remained under pressure on profit taking.
    
 2:42 PM      SETTLE    NET     PCT      LOW    HIGH  CURRENT
                       CHNG    CHNG                       VOL
 Sugar OCT     19.44   0.01    0.05%    19.30   19.65   60,643
 Sugar MAR     20.16   0.06    0.2%    20.00   20.27   55,004
 Cocoa SEP      2674    -22   -1.5%    2,646   2,710       45
 Cocoa DEC      2632    -21   -0.9%    2,598   2,679   12,352
 Coffee SEP   177.25   3.85    1.9%   176.70  176.70        1
 Coffee DEC   177.55      3    1.7%   173.10  180.00   26,894
 
 TOTAL MARKET              VOLUME          
                CURRENT   30D AVG  250D AVG
 ICE SUGAR      147,040    88,546    96,832
 ICE COCOA       18,188    24,869    22,140
 ICE COFFEE      38,946    22,921    22,181
                                                              
    RAW SUGAR
    * ICE October raw sugar futures were almost flat,
settling at 19.44 cents per lb, up just 0.05 percent.
    * It had traded in a range of 19.30 and 19.65 cents.
    * The sweetener had swung in and out of negative territory
as investors braced for a bearish harvest update from Brazil's
cane association. As expected, output from the world's No. 1
producer continued to grow last month due to better weather, the
report said.
    * Under perfect weather Brazil's center-south cane mills put
out 3.34 million tonnes of sugar in the second half of August,
up more than 12 percent from a year ago and keeping up a
crushing pace of production that had picked up in July, industry
association Unica said. 
    * Position rolling out of the October contract, ahead of its
expiry at the end of the month, and into March continued and
boosted volume - traders.
    * At current prices, only about a third of global capacity
is profitable, with 40 percent struggling to make ends meet,
Newedge USA senior vice president Mike McDougall warned.
    * Sugar exports from Thailand, the world's No.2 exporter,
are likely to ease to 7.5 million tonnes in 2012/13 from 7.7
million tonnes in the current year as production falls on poor
rainfall in cane-growing areas, a leading producer said on
Tuesday. 
    * For a third year in a row, India is likely to produce more
sugar than it can consume domestically in the marketing year
starting from Oct. 1, although the exportable surplus will be
small, Food Minister K. V. Thomas said. 
    * Exports from Brazil's key sugar producing region will rise
to 25.5 million tonnes in 2013/14 from 22.7 million tonnes in
the current season, which will help reduce global prices
further, Macquarie Bank said on Tuesday. 
         
    ARABICA COFFEE    
    * Benchmark December arabica futures on ICE jumped
more than 3.5 percent to a six-week high of $1.8 per lb.
    * Origin selling pushed prices off those highs to settle at
$1.7755 per lb, up 2.2 percent, on above-average volume. Gains
followed an almost 7-percent rally on Monday.
    * Small stops came in at $1.75 per lb, which coupled with
fund support encouraged day traders and small specs to probe
higher with $1.80-1.82 in their sights, Sucden's Nick Penney
said.
    * "The rally was met with good origin and trade selling and
only 156 lots traded there," Penney said.
    * Traders had expected producer hedging to resume after the
rally, which took prices up 15 percent over three days.
    * "When prices in New York are sitting at $1.8 and the
differentials are 7 cents under, it suggests it offers a good
opportunity for (Brazilian) selling," said Keith Flury, senior
commodity analyst at Rabobank.
    * The three-day short covering rally is coffee's biggest
since June 2010 when the market was just starting its long climb
to record highs above $3 per lb.
    * The gross speculative short position revealed in Friday's
data would represent than 10 percent of 2011/12 global coffee
production, which the International Coffee Organization (ICO)
pegged at 132.7 million 60-kg bags. 
    * Open interest dropped by 345 lots to 144,592 lots,
reflecting the extent of the short covering.
    * Coffee exports from El Salvador fell to 49,166 60-kilogram
bags, or a 37 percent decline, in August compared with the same
month last year, the national coffee council CSC said.
 
    * The top price of Kenya's benchmark grade AA coffee fell to
$302 per bag at this week's auction from $312 fetched at the
previous sale on quality fears although volumes increased.
 
    * Vietnam's coffee sales could slow next month at the start
of the new harvest due to thin supply, partly because many
exporters have struggled to secure loans. Also, farmers have
been under little pressure to sell thanks to strong prices since
2011, traders said. 
    
    COCOA
    * ICE December cocoa futures settled down $21, or 0.8
percent, at $2,632 per tonne on profit taking after prices hit
10-months highs on Thursday.
    * "This is a function of profit taking. If there are any
supply shocks, we could reach a higher plateau," said Keith
Flury, senior commodities analyst.
    * Ghana has delayed implementing a windfall tax on mining
profits while it considers whether to scrap the proposed levy,
the head of the country's mining regulator said. 
    * Cocoa prices in most of Ivory Coast's principal growing
regions and at its two ports surged last week as exporters and
merchants scrambled to secure stocks due to worries about
early-season supply, farmers and buyers said on Tuesday.
 

For related news and prices, click on the codes in brackets:  
Sugar futures/spreads   Sugar cash prices  
Coffee futures/spreads  Coffee cash prices 
Cocoa futures/spreads   Cocoa cash prices    
       
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 (Reporting by Josephine Mason; Editing by Bob Burgdorfer)
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