Coffee futures trade near 5-month low, sugar dips

 

U.S. soft futures were mostly lower during U.S. morning hours on Monday, with coffee prices trading close to last week’s five-month low amid ongoing concerns over ample global supplies.

Farm commodities came under further pressure from a broadly stronger U.S. dollar, after Friday’s stronger-than-expected U.S. jobs report prompted investors to trim back expectations for another round of quantitative easing by the Federal Reserve.

The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, was up 0.3% to trade at 80.88, the highest level since September 7.

A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.

On the ICE Futures U.S. Exchange, Arabica coffee for December delivery traded at USD1.5422 a pound, shedding 0.2%. The December contract fell by as much as 0.45% earlier in the day to hit a session low of USD1.5382 a pound.

Front-month prices touched USD1.5285 a pound on November 1, the weakest level since June 21.

Coffee futures have been under heavy selling pressure since touching a ten-week high of USD1.8542 a pound on October 3, losing nearly 17% as concerns over the pace of the Brazilian coffee harvest eased.

Brazil is the world’s largest producer and exporter of Arabica coffee. Arabica is grown mainly in Latin America and brewed by specialty companies.

Market players said that an anticipated rebound in Colombia's crop further weighed and added to view that global supplies of the bean are more than ample.

Meanwhile, sugar futures for March delivery traded at USD0.1939 a pound, easing down 0.1%. The March contract held in a tight trading range of USD0.1948 a pound, the daily high and a session low of USD0.1939 a pound.

Front-month prices slumped to USD0.1919 on October 31, the cheapest level since September 21.

Sentiment on the sweetener has turned negative since hitting a two-month high of USD0.2176 a pound on October 4, dropping almost 11% amid receding concerns over the pace of the harvest in Brazil’s Center South-region.

The country’s leading sugar industry group Unica said last week sugar output in Brazil’s Center South-region jumped 57% in the first half of October.

Output in the region rose to 2.79 million metric tons between October 1 and October 15 from 1.78 million a year earlier

Brazil’s Center South-region produces nearly 90% of the nation’s sugar. The South American country is the world’s largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Elsewhere, cotton futures for December delivery traded at USD0.7025 a pound, dipping 0.15%. The December contract was stuck in a range between USD0.7044 a pound, the daily high and a session low of USD0.7003 a pound.

The December contract fell to USD0.6967 a pound on Friday, the lowest since July 26, after prices were unable to hold above their 100-day moving average, triggering sell orders amid