adminLONDON — ICE cocoa held steady yesterday near Tuesday’s 32-month high, supported by a strong demand outlook, while raw sugar rose more than two percent after touching a one-month low earlier this week.
ICE arabica coffee futures firmed due to uncertainty over the extent of crop losses from a drought in top grower Brazil.
ICE July cocoa was flat at $3,029 per tonne at 1131 GMT. On Tuesday, the ICE second-month, September contract touched a 32-month peak of $3,060.
“There has been good weather in Africa over the last two years. But will it continue?” said one London-based cocoa futures dealer, referring to risks that El Nino could bring drier weather to West Africa before the main crop harvest.
Jonathan Parkman, head of agriculture at broker Marex Spectron, said he saw risks of a global cocoa deficit next season.
“I think that if you have normal weather next season it is likely we will end up with a small deficit (up to 100,000 tonnes) but an El Nino is developing and current forecasts for West Africa for later in our summer are not particularly favourable,” he said.
“It would be a brave person who forecasts normal weather at the moment.”
Parkman added: “It appears the mid crops will be above trend this year because of the rainfall we have had recently. Because we’ve had such a big mid crop it may be that the start of the main crops in West Africa are slightly delayed.”
Cocoa has benefited this year from expectations for a rise in demand for chocolate as global economic growth picks up.
September cocoa in London traded up £2 or 0.1 percent at £1,913 per tonne in slim volume of 853 lots.
ICE July raw sugar jumped 0.37 cent or 2.2 percent to trade at 17.48 cents a pound.
“It is a technical correction. There is no fresh news out. A lot of funds baled out on Tuesday, and maybe they have come back now,” a London-based broker said.
Ample global supplies of the sweetener limited price gains.
July raw sugar futures on Tuesday hit a one-month low of 16.95 cents, pressured by plentiful supplies.
Liffe August white sugar rose $7.60 or 1.6 percent to $474.80 per tonne in modest volume of 1,669 lots.
July arabica coffee futures on ICE were up 4.55 cents, or 2.6 percent, at $1.8070 per lb.
September, second-month futures were up 4.1 cents or 2.30 percent at $1.8265 per lb.
Trading in arabica has been choppy as a divergence in views over the size of Brazil’s crop has kept the market on edge.
Drought hit the Brazilian crop in January and February. It has been difficult to assess the damage, because it will only be known whether the harvested beans are usable when they have been dried and processed.
July robusta coffee futures rose $29 or 1.5 percent to $1,936 per tonne in light volume of 2,239 lots.
“Short-term indicators suggest the potential for losses to falter around the key 1,900 level, which acts as immediate support,” said Myrto Sokou, senior research analyst with Sucden Financial Research. — Brecorder.com
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