Coffee Futures Bounce from Lows; Wheat Dips after Rally

Laura Clarke

  Robusta coffee futures stabilized Thursday after hitting a new three-year low

in the previous session, while wheat futures retreated from gains made

Wednesday.

  At 1110 GMT, January robusta coffee futures were up 0.1% on the day at $1,587

a metric ton. Prices were stabilizing after hitting their lowest level in three

years Wednesday as expectations of a bumper crop in the world's number one

robusta producer Vietnam pressured prices.

  "Short term, we expect some consolidation around the $1,590-1600 area," said

Sucden Financial. "Another round of sell-off could see prices to retest the

recent low at $1,572 level [and] immediate support could be found near the

psychological level $1,500 a ton."

  Robusta was a hot commodity earlier this year amid rising demand for instant

coffee and fears that the supply of beans would be limited this season. Prices

jumped almost 17% between mid-June and mid-July.

  But now, Vietnam has already started to harvest its crop and analysts believe

that the likelihood of a big harvest means prices have even further to fall.

Ample rainfall earlier this year eased concerns about possible shortages.

  Meanwhile, European Union wheat futures dropped 1% to 205.50 euros ($283) a

ton, more than retracing gains made Wednesday when prices hit their highest

level since June 3 on a technically driven leap.

  Cocoa futures for March delivery fell 0.3% to 1,711 pounds ($2,770) a ton.

The market hit a two-year high of GBP1,774 a ton Oct. 15. "Cocoa gave back all

of yesterday's gains for little apparent reason," said Eric Sivry, Head of Agri

Options Brokerage at Marex Spectron. "It looks as if the market is defining a

new range and everyone is a little nervous of what the next move could look

like--the bulls like to think that the next GBP50 could be lower, but that the

next GBP200 may well be higher."

  December white sugar futures continued to slip, falling 0.9% to $504.30 a

metric ton and retracing nearly all of the gains made earlier in the week after

the market jumped to a near one-year high last week as a fire damaged sugar

warehouses in Brazil's port of Santos.

  Copersucar, the largest exporter of sugar from Brazil, the world's biggest

producer, was forced this week to invoke "force majeure" on some of its

contracts to deliver sugar, one of the company's customers told The Wall Street

Journal.

  Analysts at Sucden Financial said that sugar prices were showing "strong

downside momentum," tipping a support level at $500 a ton.