-New York-based contracts closed for Labour Day holiday

LONDON: Robusta coffee futures rose to an 18-month high on Monday, boosted by tightening supplies in thin trading conditions with US markets shut for the Labour Day holiday.

November robusta coffee ended $12 or 0.6 percent higher at $1,877 per tonne. The benchmark second month had earlier peaked at $1,881, the highest since March 2015.

Dealers said adverse weather had curbed robusta production in Brazil and Indonesia this year and a lower crop was also anticipated in top grower Vietnam.

“There is a robusta deficit (for the current 2016/17 season) and there needs to be switch from robusta usage to arabica usage and the only place that is happening at the moment is Brazil,” one London dealer said.

Dealers said the premium for arabica over robusta coffee needed to narrow to encourage more widespread switching.

“We think the arbitrage (arabica premium) is too wide. We don’t see much downside potential in robusta,” the dealer added.

A run-up in the arabica market fuelled partly by concerns that early flowering could curb production in Brazil next year has seen the arabica premium widen during the last three weeks.

Arabica futures were closed on Monday, along with raw sugar and New York cocoa, for the US holiday.

London cocoa futures weakened as sterling jumped to a 7-week high against the dollar but largely recouped losses as the UK currency’s rally stalled.

December London cocoa settled just 1 pound lower at 2,275 pounds a tonne.

Dealers said the market remained underpinned by a weak end of the 2015/16 crop year in top grower Ivory Coast and expectations of the slow start to the 2016/17 season which begins on Oct. 1.

Cocoa arrivals at ports in Ivory Coast totalled around 5,000 tonnes between Aug. 29 and Sept. 4, down from 22,000 tonnes in the same period last year.

White sugar futures edged up with October ending $1.20 or 0.2 percent higher at $540.20 per tonne.

Dealers said the market was supported partly by strength in the crude oil market and a slightly weaker dollar.—Reuters