ICE arabica coffee sank in choppy, light trade on Monday as investors booked profits, while raw sugar futures gained amid reduced producer selling due to the holiday in top grower Brazil. Cocoa futures eased in trading that was notably thin across the board after ICE Futures US softs markets opened late following the Good Friday holiday. The Liffe market was closed but due to reopen on Tuesday.
The benchmark July arabica coffee contract fell 4.90 cents, or 2.4 percent, to settle at $1.992 per lb, driven by persistent uncertainty over crop loss in top grower Brazil after unfavourable weather this growing season. Fewer than 14,900 lots changed hands, or about two-thirds of the 30-day average, preliminary Thomson Reuters data showed. The second-month soared 8 percent during the previous session on estimates of large losses in Brazil's South Minas region.
Earlier in the week, Brazil's Cooxupe, the world's largest coffee co-operative, pegged drought losses in the country's key growing region above 30 percent. "The bulls are still in control, but there's not enough momentum today to push us higher because of the long weekend," said Hector Galvan, a senior softs broker at RJO Futures in Chicago. "The news has to keep coming to see us push higher, and for now people may be taking profits."
Weekly US government data on Friday showed that speculators increased their bullish bets on arabica coffee futures and options in the most recent reporting week, even as they cut their net long positions in raw sugar, cotton and cocoa traded on ICE. Benchmark prices have risen over 75 percent year-to-date as a record hot January and February in Brazil ignited worries over supplies and reversed expectations of another year of huge supplies.
The front-month May raw sugar contract on ICE rose 0.18 cent, or 1.1 percent, to 16.84 cents per lb on a lack of producer selling and light trade buying. The contract recovered most of Thursday's losses as it traded in a tight range, finding support as it hovered near technically oversold territory. The front-month's 14-day relative strength index inched up to 47 from 44. Brazil remained shut after last week's Holy Week, leaving the world's top producer and exporter out of the market.
With about 47,500 contracts changing hands, the day's ICE volumes were a little more than half of the 30-day average. "Destination is willing to buy in a scaled-down fashion here," said Phil Pia, a broker with Newedge USA in New York. China's sugar imports totalled 411,100 tonnes last month, surging from March 2013, customs data showed on Monday. The increase eased traders' concerns over waning demand.
In cocoa, ICE's second-month July contract closed down $16, or 0.5 percent, at $3,004 a tonne. Some 2,900 contracts were traded, just a sliver of the 30-day average volume of 24,900 lots. North American cocoa grindings rose for a sixth straight quarter in the first quarter, but with the smallest increase in nearly a year and a half, National Confectioners Association data showed on Thursday after the close.
Cocoa prices surged 20 percent in 2013 due to expectations of another year of a supply deficit due to rising demand. The momentum of the rally has slowed since late January as prices met resistance at 2-1/2-year highs. "We know there's less supply out there, but we had been hoping on a lot more demand. The grind numbers were a letdown," said RJO's Galvan. The data showed a jump from grindings during the first quarter of 2013, which had been revised higher by about 1,800 tonnes, but was still largely in line with expectations.
