Coffee and Sugar Pare Weekly Gains Amid Market Volatility

(Bloomberg) -- Coffee, sugar and cocoa all declined on Friday, paring weekly gains.

Robusta coffee dropped by as much as 1.4% to $2,260 per ton. Arabica was also lower after trading near a seven-year high on Thursday amid low inventories in ICE-monitored warehouses. Raw sugar declined as much as 1%, after reaching the highest level in a month during the previous session. 

Those commodities continued to trade higher on a weekly basis, helped in part by a rebound in the Brazilian real. 

“The market is volatile and will continue to be volatile,” said Carlos Mera, head of agricultural commodities market research at Rabobank in London “That’s what you’d expect when stocks at destination are low and there are lots of players very willing to hold the commodities, coffee in particular.”

Prices for coffee, sugar and cotton have surged this year as droughts and frosts in Brazil have severely hurt harvests while demand has recovered as economies re-open on a receding pandemic.

That’s likely to change next year, analysts at Fitch Solutions said in a report Friday.

“Our outlook for 2022 is bearish across most softs, as improved output levels and reduced demand for some crops as crude oil prices fall results in larger surpluses,” they said, adding that cocoa prices should rise.

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