Liffe cocoa soars

September cocoa on Liffe ended 16 pounds higher at 2,344 pounds a tonne on Wednesday. Market boosted by talk that supplies of tenderable quality cocoa look set to remain tight until late this year which has seen nearby premiums widen significantly.
August white sugar ended $7.60 lower at $492.60 per tonne. Market seen remaining rangebound in the near-term, underpinned by more demand for physical supplies. July robusta coffee finished $4 higher at $1,334 per tonne. Market modestly boosted by gains in ICE arabicas. Earlier, ICE raw sugar futures inched up on Wednesday, as the dollar weakened, while steady cash demand underpinned the market and the immediate price outlook appeared to be sideways to firmer.
ICE cocoa fell and coffee rose in choppy two-way investor dealings in moderate volume. Dealers talked of a lack of sellers of physical raw sugar, supporting prices. "There is more demand for physical sugar. Sugar can probably go up a little more, but we will find a lot of resistance around 16 cents a lb," said a London-based sugar futures dealer.
Commerzbank said in a market report there was a risk the cane harvest in India, the world's number 2 producer, which is due to start in October, would fall short of expectations and the global market surplus would be lower than expected. Some brokers said they expected prices to remain in their current range in the near term.
"A quick straw poll of our clients found that most expect the market to stay within a 13-16 cents/lb range over the next few months: perhaps testing the higher top end again before the July expiring," a European broker said in a daily report. Thomas Kujawa wrote in a daily report of broker Sucden: "At the moment it's stalemate."
"Perhaps a retest of 15.50 is imminent. Overall, however, it still seems a bit adventurous to want to be long above 16 cents in the current atmosphere," he said. "The overall sentiment is that July and September could be tight," one London dealer said, adding there could be a shortage of tenderable quality cocoa until main crop supplies start to flow in from West Africa towards the end of the year.
Dealers said Liffe cocoa had outpaced ICE during the recent run-up with the London market's premium on a July/July basis widening to about 370 pounds, up from around 320 pounds earlier this week. Dealers kept a close watch on weather forecasts for Brazil with any signs of a cold snap likely to generate some buying. Meteorlogix, however, forecast on Wednesday that conditions were generally favourable for the maturing crop. "There is no damaging cold in sight," Meteorlogix said.