Cocoa extends losses, sugar rebounds

Cocoa futures racked up their biggest three-day tumble in four months by Thursday as the market absorbed a large global surplus, while raw sugar climbed. Arabica coffee futures were also lower in an inside session, pressured by light profit-taking as the market waited for direction after falling from the highest level in nearly four months.
Dealers said there was large volume on the Liffe September/December cocoa spread at a discount as wide as 48 pounds a tonne, its lifetime low. "That reflects the bumper amount of cocoa which is coming in. Nobody really wants to hold on to cocoa at the moment," one London dealer said. Most forecasts range from a 200,000-400,000 tonne global 2010/12 surplus.
"We have this big main crop coming and demand is down a little bit, from what I'm hearing," said Nick Gentile, head of trading at Atlantic Capital Advisors. December cocoa on ICE dropped $43, or 1.5 percent, to close at $2,911 a tonne, the lowest close for the contract since August 12. Prices on Liffe also slid with December ending down 30 pounds, or 1.6 percent at 1,861 pounds a tonne, its weakest settlement since August 15.
The benchmark December arabica contract climbed more than 23 percent in less than four weeks, reaching a near-four-month high at $2.9085 per lb before falling recently. ICE December arabica coffee futures inched down 0.40 cent to settle at $2.8410 per lb, in an inside session after rebounding from a session low of $2.81.
Robusta coffee futures on Liffe climbed, with November closing up $46 at $2,219 a tonne. Vietnam, the world's second-largest coffee producer after Brazil, will run out of beans soon and have no stocks to carry forward to the next 2011/2012 season, an industry official said.
"We believe there is now a stark realisation in the market that more investment is needed in Brazil's sugar sector if it is to continue to support global sugar demand," Standard Chartered analyst Abah Ofon said in a Thursday market note. ICE October raw sugar futures climbed 0.32 cent, or 1.1 percent, to close at 28.73 cents per lb. October white sugar futures on Liffe rose $7.40, or 1.1 percent to settle at $763 per tonne.