March 12, 2019 / 6:42 PM / 2 months ago

SOFTS-Arabica coffee nosedives, second month hits 13-year lows

(Recasts throughout; updates prices, adds market activity, comments, ICE data, NEW YORK dateline)

NEW YORK/LONDON, March 12 (Reuters) - Arabica coffee futures on ICE collapsed on Tuesday, as a global surplus dragged the second month to its lowest levels in over 13 years.


* May arabica coffee settled down 1.2 cents, or 1.2 percent, at 96 cents per lb, after trading as low as 94.65 cents, the lowest for the second month since December 2005.

* Dealers were watching support at the recent front month lows of 93.55, touched in February, and 92 cents, last seen in September.

* Coffee prices have been squeezed by excess global supplies, especially from top grower Brazil.

* “It’s a total blowout in the coffee market today,” said one U.S. trader. “With all of these surpluses, it’s going to be hard for coffee to do anything to the upside.”

* Though a small deficit is expected in 2019-2020, many market participants are already anticipating record-large output in 2020/2021, the next on-year in the Brazilian production cycle. This could make the upcoming deficit an irrelevant market factor, said Rodrigo Costa, director of trading at Comexim USA.

* Total open interest climbed on Monday to 320,063 lots, a five-month high, ICE data show. This could indicate new shorts in the market, dealers said.

* With prices this low, producer selling should start to dry up soon, said Steve Platt, futures strategist at Archer Financial Services. Prices could start impacting yields as farmers struggle to afford adequate inputs, he said.

* May robusta coffee settled down $7, or 0.5 percent, at $1,525 per tonne.


* May raw sugar settled up 0.04 cent, or 0.3 percent, at 12.33 cents per lb.

* Prices got some support from gains in oil, which was up on signs of tightening supplies from Saudi Arabia and Venezuela.

* Stronger oil prices tend to support sugar by encouraging cane mills to produce more ethanol rather than the sweetener.

* Six mills resumed crushing cane in Brazil’s center-south region, the world’s largest cane-producing area, ending the between-crops period early while demand for ethanol in the country continues strong, cane industry group Unica said on Tuesday.

* May white sugar settled down 40 cents, or 0.1 percent, at $340.10 per tonne.


* May New York cocoa settled up $15, or 0.7 percent, at $2,217 per tonne, its third straight positive finish.

* May London cocoa settled up 18 pounds, or 1.1 percent, at 1,684 pounds per tonne.

* While supplies are plentiful, concerns about dry weather in top grower Ivory Coast and its potentially detrimental impact on the April-to-September mid-crop helped underpin prices, dealers said. (Reporting by Ayenat Mersie in New York and Maytaal Angel in London; editing by Jonathan Oatis)

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