Sugar Dips, Coffee Steadies, Eyes On Vietnam Exports, Real

LONDON: ICE sugar dipped on Tuesday but remained within sight of 17-month highs touched last week due to revised Asian crop forecasts, while coffee steadied with a focus on Vietnamese exports and the Brazilian real.

Raw sugar futures remained well supported by downward revisions in crops in big producers such as India and Thailand due to dry weather, and dealers shrugged off a speculator-driven sell-off on Thursday after a sustained rally.

"It's the fundamentals driving this market, followed by the specs," said Michael Liddiard of consultancy Agrilion.

He said he saw potential for more near-term upside in prices due to global supply tightness.

"16 cents is not a high price. It's still below the costs of production in many countries," he said.

ICE May raw sugar was down 0.16 cent, or 1 percent, at 15.78 cents per lb at 1108 GMT, having touched a 17-month peak of 16.75 cents a lb on Wednesday.

Weekly U.S. government data published on Friday showed that speculators had continued to build their bullish bet in raw sugar contracts in the week ended March 22. Speculators also boosted their net long position in white sugar contracts.

Coffee futures steadied, with robusta prices pressured by strong exports from top grower Vietnam in March, and arabica coffee futures linked to fluctuations in the Brazilian currency.

Vietnam, the world's largest robusta producer, will export an estimated 160,000 tonnes (2.67 million 60-kg bags) of coffee in March, up 18.8 percent from a year earlier, the government said on Friday, in line with market expectations.

"Exports from Vietnam in March were very large, and that is weighing on robusta prices," said Carlos Mera, commodity analyst with Rabobank.

"The real has stopped appreciating, which has caused quite a bit of producer selling of arabicas," he added.

Weakness of the real boosts the incentives of Brazilian producers to sell dollar-denominated arabica coffee in order to maximise returns in local currency.

ICE May robusta coffee was flat at $1,491 per tonne, while May arabica coffee was off 0.8 cent, or 0.6 percent, at $1.2775 per lb, down from last week's five-month high of $1.364.

ICE May New York cocoa was up $14, or 0.5 percent, at $2,984 per tonne.

London May cocoa was down 4 pounds or 0.2 percent at 2,198 pounds per tonne.

Source: Business Recorder