LONDON, Dec 18 (Reuters) - Arabica coffee futures on ICE were higher on Wednesday with the market resuming its recent uptrend after the prior session’s sharp setback while raw sugar prices also rose.
* March arabica coffee was up 1.60 cents, or 1.2%, at $1.3530 per lb at 1203 GMT.
* The contract rose to a peak of $1.4245 on Tuesday, the highest for the benchmark second position since September 2017, before suffering a sharp setback.
* Prices had been rising sharply since mid-October supported by fund buying against the backdrop of tightening supplies with exchange arabica stocks falling and a global deficit widely forecast for the 2019/20 season.
* Concerns that dry weather in Brazil could curb production in the 2020/21 season have also been supportive.
* “It remains to be seen how long the price euphoria will continue. After all, even though it was too dry in some parts of the coffee belt in September and October, most observers expect the next high-yield crop in Brazil (2020/21)...to achieve a new record,” Commerzbank said in a market note.
* March robusta coffee was up $17, or 1.2%, at $1,433 a tonne.
* March raw sugar rose 0.09 cents, or 0.7%, to 13.36 cents per lb, edging up towards last week’s more than one-year high of 13.67 cents.
* Dealers said the market had been consolidating this week with funds now having largely covered a net short position which exceeded 200,000 lots in early November.
* Prices remained underpinned by a global sugar deficit in the current 2019/20 season.
* “Certainly the buying impetus from investors cutting short positions is likely to be diminishing...Price momentum though remains positive so investor buying, if for a different reason, may not have come to an end,” Commonwealth Bank of Australia analyst Tobin Gorey said in a market note.
* March white sugar rose $1.00, or 0.3%, to $353.70 a tonne.
* March New York cocoa was down $9, or 0.4%, at $2,525 a tonne.
* Dealers said the market remained on the defensive partly due to an improving crop outlook in top producer Ivory Coast.
* March London cocoa fell 4 pounds, or 0.2%, to 1,779 pounds a tonne.
* Ivory Coast and Ghana’s move to combat farmer poverty with a living income premium for their cocoa sales is being undermined by chocolate makers scaling down purchases and negotiating discounts on other parts of the price, sources said. (Reporting by Nigel Hunt;Editing by Elaine Hardcastle)