Liffe cocoa hits three-week high

Liffe May cocoa ended 11 pounds higher at 2,210 pounds a tonne on Monday, below its six-month peak of 2,269 pounds a tonne. The contract touched a three-week high of 2,231 pounds in early trading after Ivory Coast presidential claimant Alassane Ouattara said he may extend his call for an export ban in the top grower past February 23, raising supply concerns.
Liffe May robusta coffee closes up $28 at $2,283 a tonne, just below its 2-1/4-year peak of $2,287 from February 3, tracking arabicas higher in a wider commodity rally. Liffe May white sugar ended $5.70 lower at $750.50 a tonne, dropping further from its record high of $857 a tonne. Markets try to reconnect with physical demand after a modest delivery against Friday's expiry of the March contract.
Ivorian presidential claimant Alassane Ouattara said he would extend indefinitely his call for a ban on cocoa exports if his rival, incumbent Laurent Gbagbo, does not leave power by the end of the ban's expiry next week. Two large international banks, BNP Paribas and Citibank, suspended operations in Ivory Coast as the power struggle following the disputed presidential election tightened its grip on the economy.
"I think the industry will panic if (the ban) carries on until the mid-crop," starting from around mid-March, said Gary Mead, commodities analyst at VM Group. "There will be concern about the cocoa in storage on quayside at ports," Mead added, referring to potential quality deterioration.
"If the ban remains in place and is extended, then much more cocoa will go over the border." "The market has basically done what it needed to do to lower the risk profile and now all are laying in awaiting until the political situation clears up in Ivory Coast," one veteran US-based cocoa dealer said.
"Volume will go first then volatility will follow as the gap between realised volume and implied volume is just too wide at 10 or 12 percent." Traders said coffee prices were tracking the broad-based rally in commodities and had broken through the previous 13-1/2-year peak, setting off automatic buy orders.
"More than anything, we're seeing technical buying," said Boyd Cruel, softs analyst for Vision Financial Markets in Chicago. "Basis March, we took out $2.5580, the previous high, and stops were hit and the next upside target would be right around $2.60." Options-related dealings also weighed on prices ahead of the March options expiry Tuesday, dealers said.