Cocoa and Coffee Bounce Off Lows
23 June 2017 - 10:46PM
Dow Jones News
By Julie Wernau
Cocoa and coffee prices bounced off lows Friday, after buyers
found bargains in the beaten-down contracts.
Cocoa for September rose 3.1% to close at $1,879 a ton on the
ICE Futures U.S. exchange, its first rise in seven sessions.
Arabica coffee for September jumped 5.6% to $1.23 a pound, its
largest daily percentage gain since June 8, 2016.
Coffee prices have been on a steady decline all year, reaching
their high for the year in January at $1.554 a pound.
On Thursday, they touched their lowest level since March
2016.
Commerzbank pointed to better conditions in Brazil, the world's
largest growing region, which has also benefited recently from a
depreciated currency against the dollar, making coffee sales more
lucrative for producers repatriating dollar sales.
"The prospects of a record crop in Brazil, partly due to the
latest depreciation of the Brazilian real, and the high global
stocks could be cited as reasons for the [recent] price weakness,"
the firm noted.
However, Commerzbank said Friday that it thinks both cocoa and
coffee prices would recover in the medium term as much of the price
weakness is due to massive negative positioning from
short-term-oriented market participants. It called the recent lows
"exaggerated."
Producers in Brazil "are not participating with the market
falling off a cliff," trading house ED&F Man's Volcafe said,
meaning that physical coffee sales are at a standstill as
speculators aggressively sell and long-positioned traders have been
liquidating.
In other markets, raw sugar for October was up 0.8% to end at
13.17 cents a pound, frozen concentrated orange juice for September
rose 3.4% to settle at $1.3225 a pound, December cotton closed up
0.4% at 67.02 cents a pound.
Write to Julie Wernau at julie.wernau@wsj.com
(END) Dow Jones Newswires
June 23, 2017 17:31 ET (21:31 GMT)
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