* Analyst see risk of further coffee price falls
* Speculators added to net long positions in sugar
* Cocoa traders focus on dry weather in Ivory Coast
(Updates prices; adds analyst comment, Liffe data)
By Marcy Nicholson and David Brough
NEW YORK/LONDON, April 2 (Reuters) – Arabica coffee futures
on ICE jumped more than 2 percent on Monday as dealers took
profits on short positions after the market showed signs of
recovering from a drop to 17-month lows, while U.S. cocoa closed
lower on heavy position rolling.
Raw sugar ended little changed in choppy dealings.
May arabica coffee futures on ICE rose 3.75 cents, or
2.1 percent, to finish at $1.8620 per lb.
“The shorts are taking profits, that’s why the (arabica)
market’s rallying,” said Nick Gentile, chief trading officer at
Atlantic Capital Advisors, a commodity fund in New Jersey.
“Specs are buying coffee back at $1.85, so they’re making a
lot of money on coffee,” he said.
Arabica futures have dropped more than 40 percent from the
highs reached in May 2011, when the market rose above $3 per lb.
The benchmark May contract fell to a 17-month low on March 22 at
$1.7445 per lb and has made volatile swings but remained within
a 14-cent range ever since.
On Friday arabica futures prices jumped 4 percent after
Brazil’s government said it would increase loans to farmers, a
move that could keep coffee beans off the market and support
prices.
But Keith Flury, a senior analyst with Rabobank, said
arabica prices could fall further in the coming weeks,
potentially to around $1.70 a lb, due to producer selling from
the coming Brazilian harvest.
“We expect to see a better supply of coffee coming out in
2012/13 and (this will) result in a lower price,” he said.
However, he said, worries over frost risks in Brazil could
emerge in coming months, which would underpin prices.
Benchmark Liffe May robusta coffee futures rose $10
to finish at $2,036 per tonne.
Speculators extended net long positions in robusta coffee
and cocoa futures and options on NYSE Liffe in the week to March
27, and cut slightly cut their net long position in white sugar,
exchange data showed.
RECORD ICE COCOA STOCKS ADD PRESSURE
Cocoa futures on ICE were little changed but volume was
heavy as May/July spreading dominated the session.
May fell $32 or 1.4 percent, to finish at $2,187 a
tonne. Total volume exceeded 43,197 lots, the highest since Feb
3.
The market was choppy, underpinned by concerns that dry
weather might hurt the mid-crop in Ivory Coast, while record
high ICE warehouse stocks and plentiful global stocks added some
pressure.
“The short position’s pretty large with the specs. There are
five million bags of stocks so people have shorted against that,
so they need to role,” Gentile said.
“The short position that needs to role against the index
longs might almost be twice the size.”
The total bags of cocoa reported by ICE Futures U.S. inched
up 1,728 bags to 5,393,598 bags on March 30, the highest on
ICE’s records that date back to 1986.
“Bean arrivals have been pretty decent from Ivory Coast and
Ghana, which suggests that supplies are ample,” Flury said.
Cocoa arrivals at ports in top grower Ivory Coast reached
around 1,039,000 tonnes by March 31, exporters estimated,
compared with 1,038,928 tonnes in the same period of the
previous season.
London May cocoa dropped 16 pounds, or 1.1 percent,
to settle at 1,446 pounds per tonne.
Raw sugar prices were also choppy and little changed, with
benchmark May sitting just beneath the 200-day moving
average at 24.89 cents per lb and remaining range bound.
“One feels that the market is liable to come under further
pressure as the substantial surplus draws nearer, unless the
dollar weakens,” a senior London-based sugar futures broker
said.
A softer dollar makes dollar-denominated commodities cheaper
in terms of other currencies.
May raw sugar on ICE dropped 0.13 cent to finish at
24.58 cents per lb.
Most of the business was in switch trade as players begin
to gradually move positions out of the spot May contract since
it will go off the board by the end of the month.
Alex Oliveira, senior sugar analyst for brokerage Newedge
USA, said most players are waiting for the start of the cane
harvest in the premier center-south cane region of top producer
and exporter Brazil.
The sugar market kept a close watch on the crop outlook in
top producer and exporter Brazil.
“It seems now to be (an) accepted fact that mills there will
open the crush 3 or 4 weeks behind schedule,” said Nick Penney
of brokerage Sucden Financial.
“It is rain that is now expected to hamper initial
operations, although it would be welcome for crop development
later on in the harvest,” he added.
Speculators raised their net long position in sugar by 2,285
contracts to a four-week high 82,956 on ICE Futures U.S. in the
week to March 27.
London May white sugar futures closed down 50 cents
at $643.10 per tonne.
(Additional reporting by Rene Pastor; Editing by David
Gregorio)
