Cocoa dips four percent

US cocoa futures fell for the third day running on Friday, dropping 4 percent to a one-month low on heavy spread trade and long liquidation as delays on a Greek debt deal rekindled worries over the euro zone crisis. "It (Greece) is causing macro stress," Country Hedging analyst Sterling Smith said.
The US cocoa market also came under technical pressure when it dropped below its 40-day and 50-day moving averages, analysts said. New York's May cocoa contract dropped $83 or 3.7 percent to close at $2,161 per tonne. London's May cocoa contract fell 44 pounds or nearly 3 percent to close at 1,424 pounds a tonne. "It came into the 50-day moving average and it was unable to hold that," said Derrick Lewis, vice-president at brokerage Cleartrade Commodities, referring to the New York contract.
New York's May contract fell below the 40-day moving average at $2,253 per tonne on Thursday, attracting heavy selling. Speculators are holding a net short position and heavy short-covering into the March/May spread ahead of the New York March contract's first notice day on Wednesday, caused the spread to narrow, dealers said. The cocoa market also remained focused on talks between industry and the Ivory Coast government concerning details of recent reforms in the sector and the launch of daily auctions. "The background macro is not helping the overall picture; there's some long liquidation, speculator selling and a general lack of buying," a London-based broker said.
Valid cocoa stocks in NYSE Liffe's nominated warehouses fell to 59,400 tonnes as of February 6 from 91,800 tonnes on January 23, exchange data showed. "If you had a position and you felt exposed you could grade within a week or two," a European dealer said. Robusta coffee futures declined as dealers eyed the newly developed premium on the March contract over May caused by slow exports from Vietnam, the world's biggest robusta producer.
May robusta coffee on Liffe was up $4 to finish at $1,934 per tonne. New York's May arabica shed 0.85 cent to settle at $2.174 per lb. Dealers said options-related buying, combined with funds' short-covering, pushed the front-month contract to a $53 per tonne premium from a discount on Thursday. Exports from Vietnam are running well behind last year's pace, forcing some coffee buyers to draw down European warehouse stocks.
Vietnam's coffee exports plunged nearly 48 percent in January from a year ago because of the Tet new year festival and as farmers held back beans in expectation of higher prices later, but traders expect sales to pick up this month. Sugar prices moved lower in quiet business. March raw sugar futures on ICE rose 0.14 cent to close at 24.67 cents a lb. London March white sugar futures fell $2.60 to close at $650.70 per tonne.