LONDON – Robusta coffee prices on the ICE futures market rose to the highest level in more than five years on Wednesday boosted by investor buying against the backdrop of tightening supplies.
Dealers said a continued lack of hedge selling, with top robusta producer Vietnam still on holiday, also helped to clear the way for prices to advance.
May robusta coffee futures were up $16 or 0.72 percent at $2,252 a tonne at 1505 GMT after earlier climbing to a peak of $2,279, the highest for the second position since September 2011.
“I think it is a combination of some spec buying and a lack of selling as it is Tet still,” one dealer said.
Tet, the Lunar New Year, is Vietnam’s biggest festival and lasts from Jan. 26 to Feb. 1 this year.
Speculators have been extending a large net long position in robusta coffee since the beginning of this year with sentiment boosted by the prospect of a second consecutive poor robusta crop in Brazil and a decline in production in Vietnam.
March arabica coffee was down 0.95 cents, or 0.64 percent, at $1.486, with recent favourable crop weather in Brazil’s arabica areas keeping the market on the defensive.
Sugar futures were higher but remained well within its recent trading band as the market awaited developments in India where a poor crop had led to expectations that the government may cut import duty to curb a rise in domestic prices.
Drought in Karnataka and Maharashtra had reduced the amount of cane available to crush and led to the closure of sugar mills earlier than initially expected this season.
“We believe that the recent set of cane crush data from Karnataka and Maharashtra will force a decision regarding the removal of sugar import duty sooner rather than later although India politics may decide the timing of the decision,” Tropical Research said in a report on Wednesday.
March New York sugar was up 0.22 cent or 1.08 percent at 20.67 cents a lb while March whites rose $3.90 or 0.72 percent to $543.90 per tonne.
Dealers said the trading volume on whites was boosted by the rolling forward of positions from March into May with the former contract due to expire on Feb. 13.
Cocoa futures were slightly higher as the market regained some ground after the New York market’s recent slide to the lowest levels in almost four years.
March New York cocoa was up $7 or 0.33 percent at $2,110 a tonne while March London cocoa was steady at 1,686 pounds a tonne.