Cocoa climbs

Cocoa futures climbed in active trading on Wednesday to their highest since November, extending the previous session's rally, on more short-covering, while early strength in the US dollar helped push sugar and arabica coffee lower Cocoa's gains were attributed to market consolidation after Tuesday's 7 percent surge, which was fuelled by short covering as the crop outlook in top grower Ivory Coast appeared to be dimming, dealers said.
"I still think we can see a little more short-covering," said Boyd Cruel, softs analyst for Vision Financial Markets, who added that he sees resistance in the ICE March contract at $2,490 per tonne. March cocoa on ICE closed up $9 at $2,422 a tonne, the spot contract's highest settlement since November 14, after touching a session high at $2,456. Total volume exceeded 23,600 lots, up 44 percent from the 30-day average, preliminary Thomson Reuters data showed.
Cocoa prices fell roughly 30 percent last year with front-month prices on ICE sliding from a 32-year peak of $3,826 in March to a low of $1,898 in December, weighed in part by a record global surplus in 2010/11. Demand for cocoa is widely expected to surpass supply in the current crop year, which should help prices recover some of what they lost last year, a Reuters poll of 20 analysts and dealers showed. Top-grower Ivory Coast has seen months of dry and windy weather hampering growing operations.
"In Q1 2012, prices are set to gradually increase on market fundamentals, a supply deficit and concern about adverse weather conditions," ABN Amro analyst Thijs Pons said in a quarterly outlook. May cocoa on Liffe rose 4 pounds to settle at 1,599 pounds a tonne, the highest settlement for the second position since November 17. Earlier it peaked at 1,621 pounds. March raw sugar futures on ICE dropped 0.38 cent, or 1.5 percent, to settle at 24.51 cents a lb. London March white sugar futures fell $12.20, or 1.9 percent, to close at $645.50 per tonne.
Arabica coffee prices on ICE also were lower with March dropping 3.25 cents, or 1.5 percent, to close at $2.1720 per lb. Arabica coffee futures are likely to rise 1.4 percent by the end of 2012 but stay well below a 14-year peak hit last year as concerns about the global economy may overshadow prospects of a supply deficit, a Reuters poll showed. March robusta coffee on Liffe inched up $1 to finish at $1,889 a tonne.