NEW YORK/LONDON: ICE cocoa and arabica coffee futures rose on Wednesday, supported by a weaker dollar, to consolidate after losses earlier in the week on global growth concerns and the euro zone debt crisis.
Sugar futures reversed and tumbled on investor sales after an early stab at higher ground petered out.
Cocoa futures bounced after hitting their lowest level in more than two years on Tuesday, but remained range bound as ample supplies capped gains. The firm sterling against the dollar helped lift US cocoa but limited the move upward on Liffe, dealers said.
"Cocoa's technically oversold and it's getting a bounce off the lower dollar," said Hector Galvan, senior market strategist for brokerage RJO Futures in Chicago.
ICE December cocoa jumped $32, or 1.2 percent, to settle at $2,603 a tonne, after dipping to the lowest level in more than two years of $2,523 the previous session.
Total open interest continued to climb to new highs, inching up 252 lots to 190,853 lots by Oct. 18, the highest since February 2008, while volume on that day shot up to nearly 32,000 lots, the highest since Aug. 10, ICE data showed.
A record 2010/11 global surplus, combined with improving crop prospects for 2011/12, has fueled bearish sentiment long-term.
"It took a long time for last year's enormous surplus to weigh on the market and actually we're going to be less influenced by that surplus and more influenced by the prospects for the current crops as time goes by," said Jonathan Parkman, joint head of agriculture at brokerage Marex Spectron.
Liffe March cocoa futures inched up 4 pounds to finish at 1,706 pounds a tonne.
Cocoa grindings in Malaysia, Asia's largest grinder, slipped 2.8 percent to 71,451 tonnes in the third quarter of 2011 from the same period last year, the Malaysian Cocoa Board (MCB) said.
North American cocoa grind data is scheduled for release post-market Thursday, with estimates pegged at 2-3 percent above a year ago.
COFFEE UP
Arabica coffee futures jumped on the weak US dollar, which attracted buyers holding other currencies into the market, but they remained rangebound.
December arabica coffee futures on ICE climbed 4.65 cents, or 2 percent, to settle at $2.3615 per lb.
"From the hedge fund mindset, the ones that were long and got caught out and liquidated are now wanting the market to fall and to see the funds come in and get an even bigger short position, then it's time to buy the market and trigger a chain of events which lead to a short covering exercise," a London-based broker said.
ICE certified arabica stocks continued to drop, falling a steep 34,813 bags to 1,365,922 bags by Oct. 18, the lowest since February 2000, ICE data showed.
January robusta coffee on Liffe turned lower following the options expiry, falling $14, or 0.7 percent, to close at $1,899 per tonne.
Raw sugar futures took a tumble, failing to hold above the key technical level above 28 cents a lb.
Most players were expected to be reluctant to take aggressive positions given a meeting of European leaders this weekend, analysts said.
"I think people are going to be quiet," said Country Hedging Inc analyst Sterling Smith. "The European situation has everyone...weary."
At 27 and 28 cents, basis March, the level of cash interest that propelled the market up, petered out, brokers said.
ICE March raw sugar futures tumbled 0.88 cent, or 3.2 percent, to finish at 26.97 cents per lbs. The contract peaked at 28.35 cents on Monday, the highest level for the front month since September 15.
The Indian Sugar Mills Association (ISMA) expects India will produce around 26 million tonnes but dealers said this forecast could be lowered.
December white sugar futures on Liffe sank 14.7, or 2.1 percent, to settle at $699.00 a tonne.
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