Cocoa hovers near 8-week high

Cocoa hovers near 8-week high

ECONOMIC NEWS

IOL Business - Jan 13th, 08:21

Cocoa futures on ICE hovered below an 8-week high on Thursday, as the market consolidated after this week's steep rally fuelled by a slowdown in port arrivals in top producer Ivory Coast. 

ICE arabica coffee futures edged up on short covering, while robustas extended their recovery from a 14-month low, supported by a weaker dollar, and raw sugar was marginally positive in thin volume.

ICE March cocoa futures were up $9 or 0.4 percent at $2,359 a tonne at 15:11 SA time, just below Wednesday's peak of $2,388, the highest level for the front month since mid-November.

“Short covering has been met by profit taking and hedging,” a senior cocoa futures dealer said.

Cocoa futures rallied this week due to concerns over the slowdown in bean arrivals and dry weather in Ivory Coast.

March cocoa on NYSE Liffe firmed 14 pounds or 0.9 percent to 1,576 pounds a tonne.

Arabica coffee futures on ICE firmed on short covering with March up 0.15 cent or 0.06 percent at $2.3505 a lb.

Dealers said the market remained underpinned by diminished prospects for the 2012/13 crop in Brazil, following a spell of dry weather, although it is still likely to reach a record level.

Brazil will produce a record coffee crop in the 2012/13 harvest season, helped by increased investment and despite a harsh dry spell that cut productive potential at the season's outset, the crop supply agency Conab said on Tuesday.

Robusta coffee futures on Liffe rose, supported by a softer dollar, as the market extended its rebound from Monday's 14-month low.

March robusta coffee stood $62 or 3.4 percent higher at $1,900 in moderate volume of 8,391 lots. The contract hit $1,712 on Monday, the lowest level for the benchmark second month since October 2010.

Raw sugar futures on ICE were marginally higher in choppy dealings but the market remained rangebound after last week's failed attempt at an upside breakout.

March raw sugar on ICE was up 0.09 cent or 0.4 percent to 23.78 cents a lb.

A European broker talked of rising open interest in sugar, up nearly 20 percent on the lows seen in mid-October, and a rise in the white sugar premium, a measure of refining profitability, driven in part by East African demand.

Export pressure

The European Union granted licences on Thursday for the export of 650,000 tonnes of “out-of-quota” sugar, approved in April to enable producers to profit from high world prices, a regulation in the EU's official journal showed.

A European Union committee is expected to decide on Thursday to cancel tenders for importing raw cane sugar for refining at reduced duties scheduled in January and February, an EU source said.

“This might disappoint the market a bit,” said James Kirkup, head of sugar brokerage at ABN AMRO Markets (UK) Ltd, referring to abundant supplies of European sugars after big harvests.

“The EU is looking to get rid of (export) sugar,” he added. “Any rally would be capped by producers, notably Indians.”

Dealers anticipate further approvals of Indian sugar for export in coming months.

London March white sugar futures were up $9.20 or 1.5 percent at $627.40 per tonne. - Reuters