New York cocoa slumps to three-year low as funds bail, coffee rallies

New York cocoa futures fell 4 percent to the lowest in more than three years on Friday, ignoring the firm British pound as funds began to dump long positions against the backdrop of an expected global cocoa surplus in the 2016/17 season. Arabica coffee futures surged 3.7 percent to the highest in nearly two years after a breach of $1.66 per lb triggered chart-based buying, helping the market close higher for the fourth straight week as open interest rose to a record. Sugar was firmer on the day but the raws fell for the fourth straight week.
March New York cocoa settled down $101, or 3.8 percent, at $2,532 per tonne in heavy volume, after tumbling 4.1 percent to $2,526, the weakest for the second position since September 2013. Traders said sell stops were triggered below $2,589. "You have seen a cascade of (sell) stops punish the price," one London dealer said, noting a favourable outlook for crops in West Africa.
"Some of the longs appear to be hanging out the white flag of surrender and New York is the aggressor," the dealer said, adding that the wave of selling in New York had driven down prices in London futures. Dealers said some of the selling might have been linked to expiry of December New York cocoa options later on Friday. March London cocoa futures settled down 74 pounds, or 3.5 percent, at 2,072 pounds per tonne, the lowest since February.
Arabica coffee futures surged as traders said funds extended an already large net long position. December arabica coffee settled up 5.7 cent, or 3.4 percent, at $1.7135 per lb, after peaking at $1.72, the highest level for the front month since January 2015. Total open interest rose for the 20th session on Thursday, reaching a record high at 220,673 contracts, exchange data showed.
January robusta coffee settled up $22, or 1 percent, at $2,188 per tonne. Raw sugar futures were higher with the market rebounding strongly this week from a six-week low set on Wednesday, boosted partly by rains in Brazil. March raw sugar settled up 0.25 cent, or 1.2 percent, at 21.73 cents per lb. The contract rallied this week as rains were set to disrupt the cane crush in the center-south region of top-grower Brazil. December white sugar settled up $6.2, or 1.09 percent, at $574.4 per tonne.