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IKAR in Mass Media

PM markets: arabica coffee price surges 4%, to 20-month high

26 октября 2016 года

Fund buying, a stronger Brazilian currency, and support from high robusta prices helped arabica coffee futures to rally more than 4%, to their highest level since 2014.

The Brazilian real broke new 15-month highs, supported by ideas that the country's new administration will be able to pass spending controls, reassuring markets over the government's solvency.

The move was supportive for coffee, of which Brazil is the world's top producer, particularly arabica, as it encourages domestic substitution of arabica for robusta.

Brazilian buying

"It really was something," Jack Scoville, at Price Futures Group told Agrimoney.

But he saw little in the fresh news driving the market. Instead he suggested that the breaking of new highs for the front-month contract "created a lot of spec buying," with sell-stops triggered.

"The market seems to be in an uptrend," he said, point to support from good demand.

In particular, demand for arabica has developed in Brazil, where the failure of the robusta harvest is forcing processors to substitute with arabica.

"They're having to use the arabica rather than the robusta," said Mr Scoville.

Vietnamese concerns

December arabica coffee surged to a 20-month high of 164.50 cents a pound, settling up 4.2%.

And there are fresh concerns in Vietnam, the world's top robusta grower, where rain is threatening to delay the crop by slowing ripening.

January robusta coffee futures settled up 0.8%, at a two-year high of $2,178 a tonne.

Harvest pressure

But pressure from the US harvest, which is seeing good conditions, pushed cotton futures to their lowest close in two weeks.

The USDA's weekly crop progress report showed condition in the US up, with 48% of the crop seen in good or excellent condition, Crop conditions are reported at 48% good or excellent, compared to 47% a week ago.

December cotton futures settled down 0.4%, at 68.49 cents a pound, the lowest close since October 11.

Two-sided day

It was a two-sided day for the main US grains, with prices flickering over both sides of unchanged.

Soybeans failed to hold the previous session's rally as January soybean futures finished down 0.1%, after trading both sides of the previous day's close, at $10.02 ¼ a bushel, as markets chewed over export prospects.

By failing to break either the highs or the lows of the previous session, January futures formed an "inside day," a bearish technical sign.

The US Department of Agriculture announced a fresh 530,000 tonne soybean sale to China.

But Darrell Holaday, at Country Futures, noted that the deal is "still part of the agreements from last week signed by China".

China buys from Brazil

And there are reports that China, by far the world's top importer, purchased 3 to 4 cargoes of soybeans from Brazil for November and December shipment.

"That was surprising and interpreted as negative for US soybean prices as it indicates US prices may need to weaken to keep the competitive advantage," Mr Holaday said.

CHS Hedging said the Brazilian exports "will cut into US market share during our peak export season

The US soybean harvest was reported at 76% complete, 1 point behind expectations. But "yield reports continue to be very good," Mr Holaday said.

Harvest slower than thought

The US corn harvest was reported at 61% complete, 1 point behind analyst expectations.

December corn futures finished down 0.4%, at $3.49 ¼ a bushel.

And US winter wheat sowings were reported at 79% planted, three points behind expectations.

Overwhelming supplies

Wheat markets were likewise two-sided, as the market digested the previous session's rapid sell-off.

"The wheat market seemed to succumb to the overwhelming nature of the supplies on paper around the globe, especially as the southern hemisphere gets set to harvest another crop," said Tregg Cronin, at Halo Commodities.

December Chicago wheat futures finished up 0.4%, at $4.04 ¼ a bushel.

Egypt wins back seller trust

Traders continue to return to Egyptian wheat tenders, as the world's top wheat buyer continues to win back seller trust after the ergot quarantine spat earlier this summer.

Seven traders made bids in the tender, including a cargo of US offered by cargo, with Black Sea selling predominating.

But Moscow-based consultancy Ikar trimmed its ideas of Russian wheat exports by 1m tonnes, to 29m tonnes, citing disappointing quality.

Paris wheat future finished up 0.5%, at E162.75 a bushel.

Pound lifts UK wheat

And feed wheat prices in the UK are soaring, thanks to the weaker pound.

The plummeting value of the pound has been supporting UK wheat prices in the wake of the country's vote to leave the European Union, as it makes UK product more competitive in overseas markets.

CRM AgriCommodities noted rising "demand for UK wheat".

Front-month November wheat futures finished up 1.1%, at £136.00 a tonne, the highest level since December 2014.

http://www.agrimoney.com/

Source: Agrimoney.com  |  #grain   |  Comments: 0   Views: 68

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