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SOFTS-Robusta coffee sets 9-week high, cocoa also up

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Published: Thursday, 17 Jan 2013 | 8:33 AM ET
By: Sarah McFarlane

* Vietnam Dec coffee shipments exceed expectations

* Raw sugar hovers just above last month's 2-year low

* Cocoa market awaits North America grind data

(Adds details, quotes, updates prices)

LONDON, Jan 17 (Reuters) - Robusta coffee futures on Liffe set a nine-week high on Thursday, boosted by strong roaster demand which has helped absorb higher-than-expected shipments from Vietnam.

Cocoa futures were also higher as dealers awaited the North American cocoa grindings data due later in the session, while sugar was little changed.

Gains on robusta coffee futures are expected to be capped by origin selling as higher prices attract Vietnamese sellers ahead of the Tet holiday in February.

Vietnam's coffee exports rose a third in December from the previous month to 162,500 tonnes, or 2.7 million bags, the customs department said, beating market expectations.

"The shipment figures are very good, without a doubt," said a European analyst.

However, dealers said the crop may have been front-loaded, and if exports tail off earlier than expected it will send a bullish signal to the market.

March robusta coffee futures rose $15 or 0.8 percent to $1,984 a tonne at 1257 GMT after earlier rising to $1,987, the highest level for the second-month since November 12.

Vietnam is in the midst of harvesting its second consecutive bumper crop, which traders expect to fall slightly short of the record output seen in 2011/12.

ICE March arabica coffee was up 1.35 cent or 0.9 percent to $1.5435 per lb.

Dealers monitored reports of coffee leaf rust in Central American countries but said it was too soon to mark down any production estimates.

"It's really hard to know at the moment because it's come on so suddenly, it's come out of nowhere," said the analyst, adding more information was needed on the areas affected.

WEAK MARGINS

ICE cocoa edged higher ahead of the publication of the North American grindings, which dealers expected would be near unchanged, compared with the same period the previous year.

Several regions reported fourth quarter grindings data, including Europe, where quarterly grindings fell by 6.2 percent partly due to poor processing margins.

"In view of weak margins, chocolate producers have been increasingly resorting to their own stocks in recent months - now these will have to be replenished," said Commerzbank in a daily commodities note.

"The corresponding data for North America will be published later today, and are likely to be better than the figures in Europe, where demand was additionally hit by the economic crisis."

The bank also noted that producer countries were playing an increasingly important role in terms of grinding and it is therefore misleading to focus solely on the traditional consumer countries.

ICE March cocoa futures rose $34 or 1.5 percent to $2,290 per tonne while London May cocoa futures traded up 14 pound or 1.0 percent at 1,471 pounds per tonne.

March raw sugar futures on ICE were up a marginal 0.03 cent or 0.2 percent at 18.48 cents but remained within striking distance of a two-year low of 18.31 hit in December.

Dealers said the market prices may be underpinned short-term by lower than expected yields in Thailand and freezing weather in China but the overall mood remained bearish with a large global surplus expected in 2012/13.

"The fundamental analysts are seemingly in complete bearish consensus medium to long term which makes trading from the long side dangerous," Thomas Kujawa of Sucden said in a market note.

March white sugar on Liffe eased $1.00 or 0.2 percent to $498.60 per tonne.

(Additional reporting by Nigel Hunt; Editing by Alison Birrane)

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*Vietnam Dec coffee shipments exceed expectations. LONDON, Jan 17- Robusta coffee futures on Liffe set a nine-week high on Thursday, boosted by strong roaster demand which has helped absorb higher-than-expected shipments from Vietnam.

   
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