SOFTS-Arabica rises 6th straight week in biggest rally since 1994
* Poll pegs Brazil 2014/15 coffee crop at 48.9 million bags * ICO chief sees supply deficit next year * Sugar's short-covering rally stalls (Updates with closing sugar, coffee prices; adds sugar market comment) By Chris Prentice and Sarah McFarlane NEW YORK/LONDON, March 7 (Reuters) - ICE arabica coffee futures rose on Friday as resistance near the key psychological level of $2 slowed a sharp rally triggered by dry weather this year in top grower Brazil. ICE raw sugar fell as prices hovered near technically overbought territory and cocoa futures gained. ICE Futures U.S. will delay the opening times for its sugar No. 11, arabica coffee and cocoa contracts by one hour effective March 10-28 due to seasonal international time changes. [ID: nL2N0LJ1RX] Coffee prices have almost doubled since the end of last year as prospects for the first global coffee deficit in five years became increasingly plausible as analysts cut Brazilian crop forecasts. Second-month May arabica futures on ICE ended the day up 1.3 cents, or 0.7 percent, at $1.9685 per lb, marking their sharpest six-week rally in nearly 20 years. Even as rains fell over key growing regions of Brazil, prices continued their upswing on uncertainty over damage already caused brought the benchmark contract to a two-year high of $2.0410 per lb this week. "There's psychological resistance here at $2 (a lb)," said Hector Galvan, senior softs broker at RJO Futures in Chicago. "We're looking for drier weather. The fear factor could come right back in and push more money into the coffee market." Dry weather has slashed forecasts for Brazil's coffee crop in 2014/15 by more than 10 percent, with a median result of 48.9 million 60-kg bags, a Reuters poll showed on Friday. A multi-year bear market has sharply reversed course on the weather concerns. The International Coffee Organization on Friday forecast a deficit of two million 60-kg bags in the 2014/15 crop year. May Liffe robusta coffee closed up $16, or 0.8 percent, at $2,099 per tonne, having on Tuesday touched a one-year peak of $2,136 per tonne. While London prices have tracked arabica's gains, they have not risen as sharply, pushing the spread between the two markets to a one-year high above $1 a lb this week. SUGAR'S BIGGEST WEEKLY RALLY SINCE OCTOBER May raw sugar on ICE dropped 0.31 cent, or 1.7 percent, to finish at 18.01 cents a lb, retreating from the previous day's four-month high of 18.47 cents as a short-covering rally broke down. Even so, the spot contract ended the week up 9 percent in its biggest up week since early October. Sugar prices have also been underpinned by the dry weather, as Brazil is the number one producer of the sweetener, but fell as rains eased worries and as the contract's 14-day relative strength index hovered near 70, technically overbought. "There's been rains in Brazil, and in the larger picture, there are big supplies still out there," said Art Liming, futures specialist at Citigroup in Chicago. May white sugar futures on Liffe sank $10.30, or 2.1 percent, to settle at $475.40 per tonne. In cocoa, ICE May futures rose $20, or 0.7 percent, to finish at $2,981 per tonne. May cocoa futures on Liffe settled up 11 pounds, or 0.6 percent, at 1,856 pounds a tonne. Prices have been bolstered by supply deficit expectations as demand for cocoa climbs. The momentum has slowed as traders grow more optimistic over production prospects for the coming mid crop in West Africa, although strong demand was expected to absorb any growth in global output. "The tail of the main crop is small but the beginning of the mid crop looks good," a European trader said. "The size of the beans should be decent." (Editing by Jason Neely, Sofina Mirza-Reid and James Dalgleish)
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