LONDON, March 25, 2011 - Coffee prices rose on Friday with the robusta market focused on the widening premium for May over July, reflecting concern about how much coffee will be available for delivery.
Sugar prices eased as the market eyed crop prospects in top producer Brazil while cocoa futures were mostly flat.
"Coffee is still bubbling away with the May/July. For the time being the jury and personally I am leaving it alone," one London-based coffee dealer said.
May robusta's premium to July rose to more than $170 a tonne, up from around $120-140 on Thursday, although it remain shy of its peak late last week of more than $200.
Dealers said a large trade house or fund is believed to be building up a large long position and already be holding a substantial portion of certified exchange stocks.
The large premium has already begun to attract coffee from origin with March exports from top robusta producer Vietnam exceeding expecations.
"Whenever you get a premium month on the board it always attracts coffee and this is going to be no different," one dealer said.
STOCKS TO RISE
"Certified stocks will go up fairly substantially if the premium stays," the dealer added.
NYSE Liffe data issued on Thursday showed a fairly modest rise during the two weeks to March 21.
May robustas rose 1.6 percent to $2,609 a tonne by 1233 GMT while May arabicas on ICE climbed 1.95 cents or 0.7 percent at $2.6775 per lb.
"We believe that the plentiful supply of robusta beans will lead to a fall in robusta prices in the medium term while in teh short-term, the high price level of arabica will prevent this," Commerzbank said in a market note on Friday.
Arabica prices have been boosted by tight supplies of high quality beans.
Sugar prices were lower as the market eyed the crop outlook in top grower Brazil.
Rains have hampered early harvesting in Brazil and led to some concerns about potential damage to the crop in the center-south, the world's premier sugar growing region.
Forecaster Telvent DTN reported on Friday that showers were continuing across cane areas of Brazil but the crop conditions were generally favourable with showery activity not that heavy.
"The weather forecasts beyond mid April are a little friendlier...and it is expected that the recent rains may have actually contributed to the long term growth prospects for the cane," Sucden Financial said in a market note on Friday.
"The early part of the crop may be difficult and therefore affect May flat price and May structure, as we saw yesterday, but longer term shows greater promise for the harvest."
May raws on ICE slipped 0.19 cent or 0.7 percent to 27.26 cents a lb while May whites on Liffe eased $6.80 to $699.30.
Cocoa futures were little changed as the market awaited further developments in the conflict in top grower Ivory Coast.
Up to one million Ivorians have now fled fighting in the main city Abidjan alone, with others uprooted across the country, the UN Refugee Agency (UNHCR) said on Friday in a sharp upwards revision of previous estimates.
May cocoa on ICE was unchanged at $3,203 a tonne while July cocoa on Liffe fell a marginal one pound to 2,073 pounds a tonne.-----
