US cocoa futures fell nearly 3 percent on Friday on disappointing European grind numbers, while arabica coffee retreated from six-week highs but sugar rose on technical support, erasing the previous session's loss. It was a second straight session of losses for cocoa on ICE Futures US as the market reeled from a smaller-than-expected rise in the fourth-quarter European grind that indicated weaker-than-anticipated demand from consumers in the region.
Cocoa had jumped nearly 15 percent during the first two days of this week in response to slow bean arrivals at ports in Ivory Coast, top grower of the beverage and confection material. Since then, cocoa has consolidated, as a huge selloff across grains markets in the last two sessions rippled into other agricultural commodities, and on pressure from a stronger dollar , up to near 17-month highs against the euro.
"They're grinding a lot of beans in Ivory Coast now, in Ghana," said Nick Gentile, chief trading official at Atlantic Capital Advisors. ICE March cocoa futures settled down $57, or 2.5 percent, at $2,269 a tonne. For the week, though, the contract was up nearly 12 percent.
In London, Liffe cocoa futures for May ended down 29 pounds at 1,525 pounds a tonne. For the week, it rose 12.5 percent. In coffee, March arabicas settled down 8.65 cents, or 3.7 percent, at $2.2525 per lb. The contract peaked at $2.3850 on Thursday, the highest level for the front month since mid-November. "I'm not sure whether you could attribute this fall to coffee fundamentals... the macro picture was the trigger," a London-based broker said.
Wall Street bank and commodities broker Goldman Sachs was positive on arabica, expecting it to return soon to near Thursday's peak due to inclement weather in main growing countries. "We see risk to our short-term price forecast as skewed to the upside as adverse weather has impacted Colombia and Central America recently," Goldman Sachs said. It put its three-month price forecast on arabica at $2.35 cents a lb.
Robusta coffee futures also fell in London, giving back early gains. March robusta coffee on Liffe fell $53, or 2.8 percent, to $1,832. The contract hit $1,712 on Monday, the lowest for the benchmark second month since October 2010. Raw sugar was the only major soft commodity to break Friday's bearish trend, with the March contract on ICE rising 57 cents, or 2.5 percent, to finish at 23.84 cents per lb. London March white sugar futures were off $8.20, or 1.3 percent, at $612.40 per tonne.
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