Friday, 11 January 2013 04:08
NEW YORK/LONDON: Cocoa futures on ICE rose 2 percent on Thursday as dealers noted industry buying and a boost from the weak US dollar, while raw sugar and arabica coffee futures nudged higher as the commodity complex made gains.
Positive trade data from China, showing the world's second-largest economy's export growth rebounded sharply to a seven-month high in December, buoyed the Thomson Reuters-Jefferies CRB index, a global benchmark for commodities as US crude oil futures jumped to the highest level in more than three months.
The weaker greenback, which dropped to a one-week low against the euro as investors saw no hints of the European Central Bank laying the groundwork for cuts to its benchmark interest rate, was seen attracting buying to the dollar-traded commodities.
"The dollar is the one thing that's giving cocoa here the leap," said one veteran softs dealer in New York.
ICE March cocoa futures rose $46, or 2.1 percent, to settle at $2,269 per tonne as dealers said chocolate makers were taking advantage of the recent fall in prices.
"The industry has bought the market scale down," said a London-based broker.
Dealers continued to monitor the development of top producer Ivory Coast's mid crop.
"We have a record mid crop setting due to the decent rains we had in November/December but now the Harmattan wind is coming in so we're not sure what the survival will be," said a trader.
"If everything is normal then we should have a decent crop, better than last year."
The intensity of the dusty Harmattan, which blows southward from the Sahara Desert from December to March, can affect crop prospects.
Gains on the London market, which trades in British pounds, were more subdued.
Liffe cocoa futures edged above the previous session's 8-1/2 month low of 1,424 pounds per tonne with benchmark May futures settling up 16 pounds, or 1.1 percent, at 1,451 pounds per tonne.
Raw sugar futures edged closer to 19 cents as dealers expected that index fund buying could help extend gains with the index's re-balancing this week.
"There is certainly an effect from the rebalancing on sugar and coffee," said Karim Cherif, commodities analyst at Credit Suisse.
March raw sugar futures on ICE settled up 0.24 cent, or 1.3 percent, at 18.96 cents a lb, after briefly trading above 19.5 cents at the turn of the year.
"The momentum we saw at the end of last year has faded," said Cherif, noting that ample supplies combined with a weak technical outlook would weigh on prices.
"I would expect some weakness ahead, with next support seen at 18 cents and 17.70 cents. If we break below this it will start to look ugly for the market on a technical basis."
The market slowly extended its gains after Unica, the industry sugar association in top grower Brazil, said the 2012/13 cane crush reached 531.35 million tonnes as of Dec. 31, up from 491.16 million tonnes crushed the previous year. The 2013/14 crush will likely surpass the current one.
The country's biggest sugar and ethanol milling group, Cosan, said Brazil's next center-south sugar cane crop will likely reach 600 million tonnes, up from 560 million to 570 million tonnes in the current 2012/13 harvest.
March white sugar on Liffe edged up $5.50, or 1.1 percent, to end at $512.50 per tonne.
Arabica coffee futures edged higher in rangebound dealings and in line with a firmer commodities complex, with March finishing up 1.75 cents, or 1.2 percent, at $1.4965 per lb.
"People are still pausing to see what the rebalancing of index funds Robusta bean prices in Vietnam eased on Thursday, tracking a drop in the London futures market and luring buyers away from Indonesian supplies, but the low prices also discouraged farmers from selling their crop to exporters, traders said.
Copyright Reuters, 2010