Soft futures rally, robusta gains more than 3%

Soft futures edged higher on Tuesday with sugar and cotton gaining less than 1% on the day, while in London robusta, arabica and cocoa marked moderate gains.

On the NYSE LIFFE, robusta coffee for September delivery traded at $1 878 a ton at 13:12 GMT, up 3.07% on the day. The contract hit a 1-month high of $1 879 minutes earlier, while days low stood at $1 819. Robusta is marking a 3.8% advance this week after settling 2,73% and 1.03% higher during the preceding two weeks.

Robusta coffee advanced on speculation supply will be limited as farmers in the leading grower and exporter, Vietnam, hold back beans, waiting for prices to jump. Meanwhile, due to Ramandan, the Muslim fasting month, supply from the third biggest producer, Indonesia, is expected to decline.

Kona Haque, a London-based analyst at Macquarie Group Ltd., said for Bloomberg: “In robusta, Vietnamese are likely to keep holding on to what is left of the remaining 2012-13 coffee crop, causing premiums to rise again against London futures.”

Robusta rose to the highest in three weeks last Tuesday amid speculation prices fell last quarter too much, while stockpiles in Europe declined and premiums in growing countries were high. The sort that is mainly grown in Vietnam fell 14% between April and June, which is the worst quarter since Q3 2011. Meanwhile, stockpiles, monitored by the NYSE LIFFE, fell by 1.3% in the two weeks to June 24.

Meanwhile on the ICE, arabica coffee for September delivery traded at $1.2428 a pound at 13:14 GMT, up 1.04% on the day. Prices held in range between daily high and low of $1.2488 and $1.2288 respectively. The C contract settled 1.8% higher on Monday and has advanced 3.3% this week after gaining a little over 1% during the past two weeks.

Cocoa gains more than 1%

Meanwhile on the NYSE LIFFE, cocoa advanced 1.35% on the day by 13:13 GMT, trading at 1 504 pounds per ton. Prices varied between daily high and low of 1 508 and 1 484 pounds per ton. Cocoa settled 1.26% lower yesterday after gaining 4.30% last week and 1.48% the preceding one.

Cocoa advanced recently although ample supply from its main growers is expected. According to the International Cocoa Organization, farmers in Ivory Coast are harvesting the third highest cocoa mid-crop ever, estimated at 440 000 tons. This is the first and smaller of two annual harvests with the second one called main-crop. Lack of rain in Ivory Coast and Ghana spurred concern the main-crop will be delayed. According to Kevin Marcus, founder of the commodity weather consulting company Marcus Weather in Passaic, New Jersey, a large mid-crop slows the development of the main-crop as the tree suppresses its early setting, hindering the development of pods.

Kona Haque commented for Bloomberg: “We remain mostly friendly on cocoa prices for the third quarter and beyond, as we believe that the bulk of the West African selling is complete now. Recent pod-counting results indicate some dry-weather risks for the new-season main crop and July-to-August rainfall patterns will need to be watched closely.”

Sugar gains as well

Meanwhile on the ICE Futures Exchange, sugar for October delivery advanced 0.61% on the day to trade at $0.1640 at 12:57 GMT. Prices ranged between daily high and low of $0.1641 and $0.1628 respectively. The sweetener settled 0.3% higher yesterday, advancing 0.9% for the week after it closed 3.90% lower the previous one.

The sweetener fell to a three-week low of $0.1623 on Friday after declining for six straight days. Brazil is the world’s biggest producer and exporter, accounting for 20% of global production and 39% of shipments. On Friday, Datargo, a Brazilian industry group, said the country’s main growing region is expected to produce more than 1 million tons of sugar this year, compared to the last one. Output should total around 35.3 million tons, above last year’s 34.1 million.

Cottons posts minor daily gain

Cotton advanced slightly throughout the day, marking a 0.13% daily gain. The fibers December contract traded at $0.8544 a pound at 13:01 GMT, ranging between days high and low of $0.8555 and %0.8509. It settled 1% higher last week after dropping during the preceding two.

In its acreage report in the end of June, the U.S. Department of Agriculture said all cotton planted area for 2013 is estimated at 10.3 million acres, 17% below compared to last year. However, the fiber was recently pressured down as concern over a slowdown in demand arose from the world’s biggest consumer, China. All of the country’s PMI readings showed worse readings than the preceding month and it received several downward revisions of its GDP growth forecast, including one from Goldman Sachs, according to which China’s economy will expand by 7.4% in 2013, down from 7.8%.

The National Bureau of Statistics reported today that China’s Producer Price Index (PPI) fell 0.6% in June compared to May and 2.7% on an annual basis. This was above expectations for a 2.6% decrease according to a Bloomberg News survey, posting the worst reading since 2002 and adding another bit to the negative Chinese economic data that has been piling in the last two months.

In its weekly crop progress report on Monday, the USDA said that the cotton squaring pace was slower than last year, standing at 51% as of July 7, compared to 67% in 2012 and below the five-year average 63%. Meanwhile, this years cotton condition is overall worse with 24% of the crop falling in the “Very poor” and “Poor” categories, 32% in “Fair” and 44% in “Good” and “Excellent”. Last year, 18% of the cotton was of “Very poor” and “Poor” quality, 38 was “Fair” and the remaining 44% was categorized as “Good” and “Excellent”.