Cocoa, coffee hit highest levels

LONDON.
COCOA and arabica coffee futures rose to the highest levels in more than three decades on ICE on Tuesday, with cocoa driven by turmoil in top grower Cote d’Ivoire and coffee by tight supplies of high quality beans.
Cocoa futures have been rising as the crisis in Cote d’Ivoire has led to a virtual halt to exports.
Presidential claimant Alassane Ouattara last month called for a one-month export ban and on Tuesday called for it to be extended.
“The situation is not getting any better,” said Kona Haque, commodity strategist at Macquarie Bank. “I think the risks are rising for short-term supply disruptions.”
Cocoa arrivals at ports in top grower Cote d’Ivoire slowed to 5 000 tonnes last week and exporters expected them to seize up completely as bank closures leave them with no liquidity to pay farmers.
May cocoa futures on ICE stood US$64 or 1,8 percent higher at US$3 563 a tonne after rising earlier to a 32-year peak for the second month of US$3 608.
Prices on Liffe also advanced with May up £48 or 2,1 percent at £2 334 a tonne after hitting £2 355, the highest level for the second month since July 2010.
Coffee prices, which have doubled since June 2010, rose to the highest levels in more than 30 years before the run-up stalled and the market fell back to little changed levels.
The rise has been driven by three consecutive below-par crops in Colombia, the top producer of high quality washed arabica beans, while the world’s number one coffee grower Brazil is heading into the off-year in its biennial crop cycle.
“Buyers are desperately looking for available supplies,” FO Licht analyst Stefan Uhlenbrock, noting a Brazil off-year alone was enough to cause a deficit in the global coffee market.
May arabica futures stood 0,20 cents or 0,1 percent lower at US$2 7280 per lb.
The contract earlier peaked at US$2 7840 per lb, the highest level for the second month in more than 30 years.
Dealers said the next major upside target was US$3,00 per lb. “There is every possibility that prices will reach that level (US$3,00). We are far away from solving the overall supply uncertainties,” Uhlenbrock said.
Brazil is holding back its big bean stocks and hoping for improved market conditions in a wager that world prices will keep on rising, its top coffee official said last week.
“Physical (coffee) prices are still very strong, and Brazil is in no rush to sell,” Haque said. “A good chunk of the farmers are pretty much sold out anyway.”
Robusta coffee futures on Liffe also rose with May peaking at US$2 417 a tonne, the highest level for the second month since March 2008. Prices subsequently slipped back to US$2 387 a tonne, unchanged on the day.
Raw sugar prices were higher, boosted by the prospect of increased imports into the European Union.
A European Union committee will vote on Thursday on whether to open a new import quota for sugar at reduced duties, to ease a supply shortage on the EU market, the European Commission said on Monday.
“The strength of the markets this morning may be as a result of a vote by an EU committee on Thursday on whether to open a new import quota for sugar at reduced duties to ease a current supply shortage,” Sucden Financial said in a market note. – Reuters.