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Tuesday, February 22, 2011

Market Close Review : Robusta coffee hits 2-1/2 year high, supplies tight


    * Consumption growth triggers robusta coffee deficit
    * Cocoa supported by turmoil in top grower Ivory Coast
    * Sugar market awaits news on Indian exports
    
    LONDON, Feb 21 (Reuters) - Robusta coffee futures climbed to  a fresh 2-1/2 year high on Monday as the market retained its  strong upward momentum, dealers said.
    Cocoa futures on Liffe rose to 7-month highs as the market  eyed the deepening crisis in top grower Ivory Coast.   
    White sugar edged up in a modest rebound after the steep  setback in prices during the last couple of weeks.
    ICE markets were shut on Monday for U.S. Presidents' Day.
     "There's a lot of positive sentiment towards the coffee   market," said Andrea Thompson, analyst at CoffeeNetwork, noting  consumption growth was pushing the robusta market into deficit.
    May robusta coffee <LRCc2> ended $50 or 2.1 percent higher  at $2,387 a tonne. It earlier peaked at $2,389, the highest  level for the second month since July 2008.
    The advance in coffee has been led by ICE arabica futures  <KCc2> which gained 7.1 percent last week and rose to their  highest levels since May 1997, boosted by tight supplies  following several below-par harvests in key producer Colombia.
    High arabica prices have encouraged roasters to increase the  volume of cheaper robusta beans in blends where possible.
    "2010-11 should have been the third consecutive global  surplus for robusta but it's now looking at a deficit. The  
Vietnam crop is fairly stable, it's really more the consumption  growth (driving the deficit)," Thompson said.
    Vietnam is the world's top producer of robusta coffee.
    Brazil, the world's biggest coffee producer, is holding back  its big bean stocks and hoping for improved market conditions in  a wager that world prices will keep on rising, its top coffee
official said on Friday.
    
    PROTESTERS KILLED
    Cocoa futures rose as tensions in Ivory Coast showed no sign  of easing and port arrivals slowed to a trickle, heightening   concern about supply from the world's top grower.

    Ivorian troops killed at least four protesters calling on  Laurent Gbagbo to step down as leader on Monday, witnesses said,  as African presidents charged with resolving Ivory Coast's  crisis arrived in Abidjan.
    European Union sanctions and an export ban imposed by  presidential claimant Alassane Ouattara have severely disrupted  shipments of cocoa out of Ivory Coast.  
    "Restriction to the flow of cocoa from the ports is no doubt  having an effect with numbers ranging from 200-300,000 tonnes  going nowhere, although allegedly smuggling is taking place," a  London-based broker said.
    May cocoa on Liffe <LCCc2> ended 23 pounds higher at 2,286 pounds a tonne after earlier touching 2,297 pounds, the highest  level for the second month since July 2010.
    White sugar futures were slightly higher with the market  still keenly awaiting a decision from India on whether to export  500,000 tonnes under Open General License (OGL).
    In December, India's farm minister had said mills could  export 500,000 tonnes of sugar under OGL. But the government,  bowing to public pressure over food prices, has referred the  issue to a panel of ministers.
    May whites <LSUc1> rose $3.90 to end at $724.50 a tonne  although prices remained far below a record peak for the front  month of $857.00 set on Feb. 2.
    The market has been weighed partly by expectations there may  be a significant supply response to high prices. Consultancy  Kingman on Sunday forecast a global sugar surplus of 5.6 million  tonnes in 2011/12 (April/March). 
    Kingsman cautioned, however, that 2011/12 crop estimates  should be viewed in light of very low global sugar stocks and  climatic volatility.
    "It will take months for the market situation to noticeably  ease and a slump in prices is therefore not on the cards for the  time being," Commerzbank said in a market report on Monday which  noted the Kingsman forecast.
Source: ((nigel.hunt@reuters.com ; +44 207 542 8421; Reuters Messaging: nigel.hunt.thomsonreuters.com@reuters.net ))