Coffee, Cocoa, Sugar and Orange Juice Lose Big in 2017

By Julie Wernau Features Dow Jones Newswires

Coffee, cocoa, sugar and orange juice futures ended 2017 in a loss as surplus supplies outweighed weather events in those markets. Among the soft commodities, only cotton eked out a gain as demand for fiber drew bullish traders into the market.

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Coffee futures ended the year in rally mode after traders began to doubt the outlook for coffee production in 2018.

Arabica coffee for March was up 1.1%, to end at $1.262 a pound on the ICE Futures U.S. exchange, its fourth straight session of gain and the highest close since Dec. 5.

"Good pictures, beautiful plantations don't mean exactly that production will be as big as expectations," said Thiago Marques Cazarini, a coffee broker in Brazil.

The coffee market is going into what is likely to be the second of two back-to-back years of surplus production, according to the International Coffee Organization. The contract ended 2017 down 8%.

Raw sugar for March closed up 1.1%, to end at 15.16 cents a pound and to end the year down 22%, with prices not far away from the cost of production, according to ED&F Man Capital Markets. Sugar analysts are anticipating surplus production in 2017/2018, with the U.S. Department of Agriculture anticipating a surplus of 10.7 million tons.

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Agrilion Commodity Advisers says consumption is likely to remain the big topic of 2018 in sugar as a growing number of sugar taxes and similar measures are rolled out globally.

Cocoa for March delivery closed down 1%, at $1,892 a ton, an 11% drop for 2017. In its latest quarterly bulletin, released Nov. 30, the International Cocoa Organization said world production of cocoa for the 2016-17 season was up 18.5% year-on-year with analysts anticipating a surplus for 2018.

Frozen concentrated orange juice for March was up 0.7%, to end at $1.3685, down 31% for 2017. Bears in the orange juice market are largely focused on Brazil, the world's largest orange grower, which is expected to provide imports for the frozen concentrated orange juice market that will boost supplies in the U.S. following a devastating hurricane that crimped supplies in Florida.

Cotton for March delivery lost 0.2%, to end at 78.63 cents a pound, ending the year up 11% on strong demand for fiber overseas. At the same time, mills are caught unpriced on their purchases, giving the market a reason to push the market higher.

Many cotton buyers entered into contracts last year to purchase U.S. cotton at a price to be determined at a later date, a common practice in the business. Most were bearish on cotton prices and figured they could pay a cheaper price in the future. As of Dec. 22, 51,130 contracts were still unfixed against the March contract, according to the U.S. Commodity Futures Commission.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

December 29, 2017 16:40 ET (21:40 GMT)