LONDON: Arabica coffee futures on ICE fell on Monday, weighed down by growing expectations that much-needed rains will fall in Brazil in the next few days.
The wetter outlook also contributed to weakness in sugar prices. Brazil is the top producer of both commodities.
December arabica coffee was off by 1.75 cents, or 1.3 percent, at $1.3270 per lb at 1256 GMT, having dipped to a low of $1.3175, the weakest for the contract since September 12.
Dealers said forecasts calling for rain in Brazil within the next week contributed to the decline. The market has recently been supported by concerns about dry weather in the world’s top producer.
“The level of confidence is growing as each day passes that the rain will actually arrive,” one dealer said.
Dealers also cited weekly commitments of traders data on Friday as a further bearish factor.
Speculators cut their net short position in arabica coffee in the week to Sept. 19 by 13,100 contracts to 19,273 contracts.
“The funds covered a lot more than we thought and it didn’t really budge the price at all so clearly that is not positive,” the dealer added.
November robusta coffee fell $9, or 0.35 percent, to $1,998 a tonne, with the market underpinned by tightening supplies ahead of the next Vietnamese harvest later this year.
March raw sugar was up 0.04 cents, or 0.3 percent, at 14.68 cents per lb, with rains expected to improve the outlook for production in the key centre-south region of Brazil.
“If this forecast materialises, the rainfall will come at a good time to ease the current dry conditions and will be a positive outcome for the sugarcane rooting and profiling development of the 2018-19 crop year in CS Brazil,” Tropical Research Services said in a weekly update.
China’s sugar imports in August fell 45.4 percent from a year earlier to 200,000 tonnes, data from China’s General Administration of Customs showed on Saturday.
“Chinese imports continue to underperform year-on-year as a result of prohibitively high duties implemented for out of quota sugar imports,” ING said in a market note.
December white sugar was off $1.50, or 0.4 percent, at $366.60 a tonne.
December New York cocoa rose $14, or 0.7 percent, to $1,997 a tonne.
December London cocoa was up 7 pounds, or 0.5 percent, at 1,479 pounds a tonne.—Reuters