LONDON: Cocoa futures on ICE drifted down on Monday towards the previous session's six-month low, as favourable weather boosted crop development in West Africa, while raw sugar edged higher and arabica coffee was little changed.
March cocoa futures on ICE fell $5 or 0.2 percent to $2,168 per tonne by 1247 GMT. The market fell to $2,165 on Friday, the weakest level for the front month since July 2012.
Dealers noted speculators had reduced long positions in cocoa contracts on both ICE and Liffe as the flow of cocoa out of West Africa picks up after a slow start to the season and the outlook for mid crops improves.
"The specs just don't seem to think there is any mileage in buying the market at the moment," one dealer said, adding light origin selling of the 2013-14 crop had added to the downward pressure on prices.
Dealers said cocoa prices on Liffe were underpinned by the weakness of sterling which hit a five-month low against the dollar on Monday.
May cocoa on Liffe rose 5 pounds or 0.35 percent to 1,432 pounds a tonne.
Dealers continued to keep a close watch on the March/May spread which has moved from a premium of as much as 10 pounds recently to a discount of about 10 to 12 pounds.
The front month climbed to a premium on concern about the low level of certified stocks on NYSE Liffe although dealers noted that overall supplies remained plentiful.
Dealers said the subsequent weakness in the spread had reinforced the bearish mood.
"It has taken the impetus out of any rallies for the time being," one dealer said, adding, however, it was still possible that the spread could strengthen again in coming days.
The December 2012 contract soared to a premium of more than 70 pounds in the run-up to expiry late last year.