May 7, 2020 / 12:53 PM / 18 days ago

SOFTS-Arabica coffee slides on weak Brazilian real, growing supplies

LONDON, May 7 (Reuters) - ICE arabica coffee fell nearly 3% on Thursday as the Brazilian real hit another record low and investors grew concerned about rising supplies in top producer Brazil.

Sugar and coffee rose meanwhile.

COFFEE

* July arabica coffee fell 2.6 cents, or 2.4%, to $1.0805 per lb.

* “The immediate pressure in coffee is very much down to the real,” said an analyst at a global trading firm. She added Brazil’s crop was looking good, with few concerns for now about adverse weather or about coronavirus lockdowns hampering output.

* A weak real raises the value of dollar-priced coffee exports in local currency terms.

* Rabobank said it expects Brazil will produce 67.5 million 60kg bags of coffee in 2020/21, consisting of 18.5 million bags conillon and a record 49 million bags of arabica, with virtually all arabica areas producing at or near record levels.

* The global coffee supply balance is seen shifting from a deficit in 2019-20 to a surplus in 2020-21 as social distancing is seen hurting demand, broker Marex Spectron said.

* July robusta coffee fell $24, or 2%, to $1,176 a tonne.

* Domestic coffee prices in Vietnam, a top robusta producer, edged higher this week on scarce supply.

SUGAR

* July raw sugar was up 0.16 cents, or 1.6%, to 10.42 cents per lb at 1333 GMT, The contract hit a 12-1/2-year low last week and has since staged a modest recovery in volatile trade.

* “Because there’s so much uncertainty over how sugar fundamentals will play out over the coming months traders continue to slavishly follow crude and (Brazil’s real) currency,” said a dealer.

* Oil prices jumped on news that China’s exports unexpectedly rose last month, and on the back of U.S. output cuts and the slow return of some activity in Europe, though the longer term outlook remained weak.

* Rising energy prices tend to discourage Brazilian cane mills from ramping up sugar output at the expense of ethanol, a cane-based biofuel.

* Sugar exports from India, a top global producer, have risen due to good demand from Indonesia and Iran as the rupee slid to a record low, increasing exporters’ margins, three industry officials told Reuters.

* August white sugar was up $3.10, or 0.9%, to $348.30 a tonne.

COCOA

* July New York cocoa was up $32, or 1.4%, at $2,395 a tonne.

* Dealers said cocoa would likely be driven in the medium term by demand destruction linked to the coronavirus pandemic and to Ivory Coast and Ghana’s ‘living income’ premium, which has inflated cocoa purchasing costs and deterred buying.

* July London cocoa rose 30 pounds, or 1.6%, to 1,940 pounds a tonne​.

Reporting by Maytaal Angel; Editing by Kirsten Donovan

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