Soft futures mixed

Coffee futures rebounded after dropping earlier as the harvest in Brazil accelerated amid favorable conditions and weaker local currency gave producers competitive advantage on the markets.

On the ICE Futures U.S. Exchange, Arabica coffee for July delivery erased earlier losses and traded at $1.2720 a bushel at 13:01 GMT, up 0.61% on the day. Prices ranged between session low of $1.2593 per bushel and high at $1.2748.

Brazil is the worlds largest producer and exporter. The country produced 54.5 million 60-kilogram bags of coffee in the 2010-2011 crop year and its export in 2011 stood at 43.484 million bags. Vietnam is the worlds second biggest producer and exporter, but has only a third of Brazils output. The South American country is projected to produce 48.6 million bags of coffee in 2013. Harvesting there was stalled up to last week due to unfavorable wet weather. According to a Somar Meteoroligia report, growing areas will get dry weather for a long period after June 5.

Flavour Coffee said in a report last week: “Farmers accelerated the picking, taking advantage of this ideal weather, sunny, dry and warm temperatures during day light. The whole Brazilian coffee belt from Parana until Bahia is in full harvesting activities.”

Brazils currency, the real, fell 6.2% against the dollar last month, which made goods prices from the Latin country more attractive for foreign buyers.

Kona Haque, an analyst at Macquarie Group Ltd. in London, said in a report for Bloomberg: “A common theme aligning coffee and sugar is not just heavy surpluses, but also the start of the large Brazilian harvests and more recently, the weakening Brazilian currency. A weaker real may encourage further selling in coming weeks.”

Meanwhile Robusta coffee prices have fallen 9.3% last month as supply rose hitting a lowest level since January 30 at $1.87 a kilogram.

Elsewhere on the market, sugar for July delivery remained unchanged for the day at 12:49 GMT and traded at $0.1644 a pound. Sugar prices have been pressured recently amid sufficient global supply. Farmers in Brazil, the world’s biggest sugar producer and exporter, accelerated the sweetener’s harvest, as with the Arabica coffee. Brazil accounts for 20% of global sugar production and 39% of the sweetener’s export.

The U.S. Department of Agriculture stated in its crop progress report last week that as of June 2 100% of the U.S. sugar was planted, compared to 94% the preceding week. It is also higher than the 98% five-year average and the 96% planted the same week last year.

Meanwhile, cotton for July delivery stood 0.10% lower on the day and traded at $0.8478 a pound at 13:05 GMT. According to the U.S. Department of Agriculture’s report published on June 3, 87% of the nation’s cotton crop was planted during the week ending June 2, compared to 59% in the preceding week. This is also 5% higher than the same week last year and 4% more than the five-year average, which equals to 83%.