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SOFTS-Coffee hits fresh two-year high, sugar eases

* Cocoa has technical bounce after subdued grind data

* Sugar trade focused on next Tuesday's white sugar expiry

* Guatemalan, Mexican sugar seen likely in delivery tonnage

(Adds trade comment, updates prices)

LONDON, April 11 (Reuters) - Arabica coffee futures on ICE hit a more than two-year high on Friday, underpinned by fears that a drought will cut top-grower Brazil's output.

London white sugar futures dropped in trading ahead of next Tuesday's May contract expiry, which is expected to feature Guatemalan and Mexican supplies delivered to the tape.

Cocoa futures rose in a technical correction after sinking on Thursday due to disappointing demand data.

Arabica coffee prices hit their highest level since February 2012, as deteriorating prospects for Brazil's production led speculators to add to bullish bets.

Benchmark ICE May arabica coffee futures were up 0.6 cent, or 0.3 percent, at $2.0670 cents per lb at 1402 GMT, after peaking at $2.0865 earlier in the session.

"Short term we expect potential for modest gains around $2.10, while a break above this level opens up potential for gains towards the $2.15 area," said Myrto Sokou, senior analyst at Sucden Financial, referring to the second month contract.

Concerns about crop damage after a record hot January and February began to resurface last week due to forecasts for dry weather and an outlook from the Coffee Crops Council for this year's output to fall as low as 40.1 million bags.

July robusta coffee futures on Liffe eased $1, or 0.1 percent, to $2,157 per tonne in modest volume of 5,805 lots.

In sugar, front-month Liffe May white sugar futures fell $9.90, or 2.2 percent, to $439.00 a tonne in slim volume of 4,915 lots.

Dealers said they expected Guatemalan white sugar and possibly Mexican supplies to feature in the delivery at expiry of the Liffe May contract on April 15.

"There is talk that Mexicans and Centrals could be delivered," said Jonathan Kingsman, director, agriculture at data provider Platts.

Nick Penney, a senior trader with Sucden, said a widening May/August spread signalled the delivery tonnage may be smaller than anticipated as positions were rolled forward into August.

"The threat of the delivery is what has become the driving force in this market," he said.

Front-month raw sugar futures on ICE fell 0.2 cent, or 1.2 percent, to 16.88 cents a lb.

It was the eighth straight session of tight, range-bound trade as worries over lower output in top grower Brazil were offset by weak demand due to high inventories.

Cocoa prices firmed in a technical correction after weakening on Thursday when data showed European cocoa grindings had risen 0.4 percent in the first quarter compared with the same period last year, below traders' expectations for a gain of around 3 percent.

May cocoa futures on ICE were up $3, or 0.1 percent, at $2,973 a tonne.

Liffe July cocoa futures were up 6 pounds, or 0.3 percent, at 1,875 pounds in moderate volume of 4,141 lots.

"Short-term, we expect initial consolidation around the 10-day moving average at 1,869 pounds, while a further correction lower could see declines toward the 40-day moving average at 1,862 pounds and the recent low at 1,843 pounds," Sokou said.

(editing by Jane Baird and David Evans)