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Softs futures mixed- coffee gains ahead of contract expiration

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Investing.com - U.S. soft futures were mixed during U.S. morning hours on Wednesday, with coffee prices moving higher as investors readjusted positions ahead of the expiration of the front-month January contract.

On the ICE Futures U.S. Exchange, Arabica coffee for March delivery traded at USD1.4428 a pound, up 0.5% on the day. The March contract traded in a range between USD1.4345 a pound, the daily low and a session high of USD1.4495 a pound.

Contract expirations often lead to volatile sessions as market participants look to close out positions or readjust their portfolios. The January contract is due to expire at the end of Wednesday's trading session.

Coffee prices tumbled to USD1.4245 on December 14, the lowest level since June 11, 2010, amid concerns global supplies of the bean are more than ample to meet demand.

The International Coffee Organization said on December 11 that world coffee production in the current marketing year will rise 8.4% from the previous season to 146 million bags, with Arabica output increasing almost 11%.

The commodity has been under heavy selling pressure in recent months, losing nearly 17% since the beginning of October.

Meanwhile, sugar futures for March delivery traded at USD0.1939 a pound, easing up 0.35% on the day. The March contract held in between a tight trading range of USD0.1927 a pound, the daily low and a session high of USD0.1939 a pound.

March sugar prices rallied nearly 6% since hitting a two-and-a-half-year low of USD0.1830 a pound on December 13, as market players closed out bets that prices would fall further after futures moved into oversold territory.

Sugar losses last week came as sentiment on the sweetener soured amid easing concerns over Brazil's sugar harvest.

Brazilian state forecaster Conab said the country was expected to produce 37.66 million tons of the sweetener by the end of the season, 4.7% more than in the previous marketing year.

The forecast came after Brazil's top sugar industry group Unica said that sugar output in the country's Center South-region totaled 32.9 million tonnes as of December 1, compared to 31.1 million tonnes during the same week a year earlier.

Brazil's Center South-region produces nearly 90% of the nation's sugar. The South American country is the world's largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Elsewhere, cotton futures for March delivery traded at USD0.7578 a pound, shedding 0.25%. The March contract was stuck in a range between USD0.7544 a pound, the daily low and a session high of USD0.7597 a pound.

The March cotton contract touched USD0.7627 a pound on Tuesday, the strongest level since October 23.

Sentiment on the fiber improved after the U.S. Department of Agriculture last week cut its estimate for 2012-13 global cotton inventories to 79.64 million bales from 80.27 million forecast.

Despite the modest decline, the new forecast is still the highest since USDA records began in 1966.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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