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Soft futures - Coffee edges higher after previous day’s rout

Published 03/06/2013, 07:45 AM
NWSA
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Investing.com - U.S. soft futures were steady during U.S. morning trade on Wednesday, with coffee prices edging mildly higher following the previous day’s sharp sell-off.

On the ICE Futures U.S. Exchange, Arabica coffee for May delivery traded at USD1.4090 a pound, up 0.3% on the day. The March contract was stuck in a trading range between USD1.1418, the daily high and a session low of USD1.4057 a pound.

The May contract lost 4.3% on Tuesday to hit USD1.4052 a pound, the lowest level since February 21 after the International Coffee Organization said coffee output in Brazil and Colombia will help make up for crop losses in Central America.

Brazil is the world's largest producer and exporter of Arabica coffee, while Colombia is the world's second largest.  Arabica is grown mainly in Latin America and brewed by specialty companies.

The news underlined concerns over ample global supplies and triggered a flurry of selling by long term speculators.

Meanwhile, sugar futures for May delivery traded at USD0.1818 a pound, down 0.1% on the day. The May contract held in a tight trading range between USD0.1811 a pound, the daily low and a session high of USD0.1823 a pound.

Prices continued to consolidate above the lowest level since August 2010 as traders were hesitant to re-enter the market amid bearish chart signals.

The sweetener fell to USD0.1788 a pound on last Friday, the lowest level since August 2010.

Sugar futures prices have been under heavy selling pressure in recent weeks as sentiment on the sweetener was dampened amid the view that global supplies are more than ample to meet world demand.

In Brazil, sugar-cane harvesting in the country’s center south, the main growing region of the world’s largest producer, will start earlier this year because of a record crop.

The South American country is the world’s largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Elsewhere, cotton futures for May delivery traded at USD0.8712 a pound, up 0.15% on the day. The May contract traded in a range between USD0.8661 a pound, the session low and a daily high of USD0.8724 a pound.

Cotton prices rallied to USD0.8744 a pound on Tuesday, the strongest level since May 7, amid indications of robust demand for U.S. supplies.

Cotton prices have rallied nearly 14% since the start of the year on the back of strong demand from top consumer China and concerns over U.S. supplies.

The U.S. Department of Agriculture said last week that U.S. farmers sold 152,900 bales of cotton for shipment in the current marketing year, 5% above the prior four-week average.

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