Sugar and coffee prices fall as Brazilian currency weakens – Markets
LONDON: White sugar futures on ICE were down sharply on Tuesday, pulling back from the previous session’s 5.5-year high, while Arabica coffee prices also fell, real currency weakness of Brazil contributing to the drop in both markets.
Brazil is the world’s largest producer of sugar and coffee and a weaker real generally encourages selling as it increases returns in local currency terms.
August white sugar fell 2.7% to $577.90 a tonne as of 1427 GMT. The first month had hit a 5.5-year high at $599.60 on Monday.
Dealers said the market for whites remained supported by export restrictions in India as well as low shipments of whites from the European Union and Algeria’s export ban.
July raw sugar fell 2.25% to 19.12 cents a pound.
White sugar futures hit 5.5-year high as part of India’s export cap
July Arabica coffee fell 1.7% to $2.3340 a pound.
Fitch Solutions said in a note that it was maintaining its 2022/23 production forecast for Brazil at 60 million bags, noting that “cold conditions in mid-May 2022 did not see temperatures fall below crop-damaging levels”.
“Our long-term view for coffee prices remains bearish, informed by our expectations that the global market will return to surplus in 2022/23 and that rising inflation and weaker global growth prospects will weigh on demand. before the end of 2022,” the note added.
July robusta coffee fell 0.75% to $2,117 a tonne.
Vietnam exported 881,565 tonnes of coffee in the first five months of this year, up 23.3 percent from the same period last year, customs data showed on Tuesday.
New York Cocoa in July fell 0.3% to $2,480 a tonne.
Rainfall was below average last week in most cocoa-growing areas of Côte d’Ivoire, but soil moisture remained high and farmers predicted a strong end to the mid-harvest of April to September.
London Cocoa in September fell 0.1% to 1,774 pounds a tonne.