Liffe cocoa hits two-month low

Liffe May cocoa ends down 113 pounds at 2,008 pounds a tonne with a late selling spree, which saw the market hit a two-month low of 2,004 pounds. The market continues to closely monitor the conflict in Ivory Coast, and any indications there could be a quick resolution are likely to erode a large risk premium. Liffe May white sugar rises $24.40 to close at $710.60 a tonne. Market supported by tight supplies of whites and steady demand from the Middle East and Africa.
Liffe May robusta coffee ends off $19 at $2,596 a tonne, having earlier touched a three-year peak of $2,672 a tonne. London's May robusta contract saw its premium to July erode slightly in volatile conditions as the market continues to assess potential tightness in available deliverable supplies.
Gbagbo and rival presidential claimant Alassane Ouattara, the internationally recognised winner of presidential polls last November, have been locked in a violent power struggle for control of the country that produces 40 percent of the world's cocoa beans. Cocoa exports have shrivelled as a result. "It looks like Gbagbo is looking to negotiate," Nick Gentile, chief of trading at commodity fund Atlantic Capital Advisors, said.
US-based cocoa traders said talk hit both markets that "80 percent of Gbagbo's generals are switching sides", sparking a flurry of sales that hit automatic computer orders which sped up the fall of bean futures. A note by an investment bank said support for Gbagbo may be eroding.
"With the exception of the Republican Guard, the CECOS (elite police unit) and sections of the gendarmerie, the moral in the rest of the troops may have deteriorated following the series of setbacks in Abidjan and the western region," it said. For the first time in weeks, the front cocoa contracts in London and New York which have been trading at a premium to the back months because of the Ivorian crisis turned into a discount on Friday.
At the close, New York's May/July spread showed a $4 discount and London showed a 5 pound discount. Sugar futures climbed as thin supplies and a revival in cash demand stoked the market higher. Robusta coffee hit a new three-year high in London before ending lower on the day. Investors were skittish going into the weekend because of unrest in the Middle East and that Japan's nuclear crisis may worsen over the weekend.