Prices were pressured by expectations that the weather outlook in top growing region West Africa may be improving, dealers said. "The Australian meteorology bureau is calling for an earlier end to El Nino than was earlier expected," one US dealer said. This would translate into less damage to the cocoa crop than had been anticipated, the dealer said.
The threat of dry Harmattan winds, tied to El Nino, have buoyed cocoa prices in recent weeks. Open interest in cocoa jumped 5,630 lots to 251,408 lots on Tuesday, ICE data show. "The negative close yesterday and open interest moving higher means that shorts are entering the market," the dealer said.
March arabica coffee settled up 0.25 cent, or 0.2 percent, at $1.053 per lb after touching a five-week peak of $1.0685. Prices were supported by the stronger Brazilian currency, which has firmed significantly over the past two weeks, dealers said. A firmer Brazilian real discourages producer selling in the top grower by reducing local currency returns on dollar-traded commodities such as coffee and sugar.
March robusta coffee settled down $21, or 1.4 percent, at $1,535 per tonne. Dealers were anticipating a pick-up in selling out of top robusta producer Vietnam ahead of the annual Tet festival early next month. March raw sugar settled up 0.11 cent, or 0.9 percent, at 12.87 cents per lb. Sugar was lifted by higher oil prices, dealers said.
Oil prices jumped more than 4 percent on Wednesday on US-China trade talks and OPEC-led output cuts. Higher oil prices encourage the increased diversion of sugarcane for ethanol production in Brazil, a top grower. Concerns about dry weather in Brazil and India were also providing some price support, dealers said.
March white sugar settled up $2.30, or 0.7 percent, at $347.70 per tonne. Singapore-based agricultural commodities trading firm Olam International Ltd will shut its sugar trade desk, spokeswoman Nikki Barber said on Tuesday, another sign of pressure on trading houses.