Cocoa futures closed at an eight-week high in heavy volume on Wednesday, underpinned by a sharp slowdown in port arrivals in top producer Ivory Coast, while arabica coffee rallied on short-covering. Sugar futures also climbed but were relatively subdued following last week's volatility and a lack of new fundamentals. The soft commodities advanced despite the day's weak move of the Thomson Reuters-Jefferies CRB index.
Orange juice futures, however, dived almost 10 percent, completely reversing the previous day's sharp gains as traders reckoned fears of a US import ban on Brazilian juice were overblown. ICE March cocoa futures rose $17, or 0.7 percent, to close at $2,350 a tonne, the highest settlement for the spot contract since November 17. That follows the biggest two-day rally in 11 years at 15 percent on a flurry of short-covering.
Total volume exceeded 26,200 lots, 75 percent above the 30-day average, preliminary Thomson Reuters data showed. London March cocoa closed up 18 pounds, or 1.2 percent, at 1,562 pounds per tonne, the highest close since November 18, on a heavy 16,374 lots. "We have to remember just how much the ICE cocoa market had sold off since September, to levels that were not sustainable," said Keith Flury, a senior soft commodities analyst with Rabobank, referring to the rallies in cocoa futures this week.
"There is not a lot of downside risk," he said, adding that he expected fourth-quarter European grinding figures due to be released on Friday, a key measure of demand, to rise 4 percent year-on-year. On the spot contract basis, ICE cocoa appeared headed for the 61.8 percent Fibonacci retracement level around $2,436, Cruel said. Arabica coffee futures on ICE also climbed in heavy volume, ignoring the strong US dollar. March jumped 8.95 cents, or 4 percent, to close at $2.3490 per lb, its biggest daily move higher in six weeks.
Total volume more than doubled its 30-day average at more than 28,000 lots, preliminary Thomson Reuters data showed. Robusta coffee futures on Liffe were firm, with upside limited by the huge crop in top producer Vietnam. March robusta coffee on Liffe climbed $33, or 1.8 percent, at $1,838 per tonne. The contract hit $1,712 on Monday, the lowest level for the benchmark second month since October 2010. March raw sugar on ICE rose 0.37 cent, or 1.6 percent, to end at 23.69 cents a lb. London March white sugar futures climbed $6.70, or 1.1 percent, to settle at $618.20 per tonne in quiet dealings of just over 3,000 lots.
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