Cocoa tumbles

Cocoa futures tumbled more than 5 percent to a one-month low in heavy volume on Thursday, after a forecast of a larger-than-expected global surplus triggered automatic sell orders. Sugar moved sharply in the other direction, soaring more than 3 percent after hitting key technical levels, while coffee moved quietly higher.
May cocoa futures on ICE tumbled to close down $93, or 4 percent, at $2,221 a tonne, the lowest settlement since February 13, after earlier falling 5.9 percent to $2,177. "A well-known analyst in the market was out overnight stating that he now has a very large surplus for this current year, and that's really what's driving the market lower," one London-based trader said.
The closely-followed analyst's forecast for a surplus in the 2011/12 crop year is in stark contrast to the expectation by many for a global deficit. Last year, leading cocoa trader Olam International Ltd's forecast a 100,000 tonne deficit and in February the International Cocoa Organisation called for a 71,000 tonne deficit. The move lower triggered sell-stops and volume shot up above 38,000 lots, the highest level in five weeks, preliminary Thomson Reuters data showed.
Liffe May cocoa futures dropped 60 pounds, or 4 percent, to end at 1,446 pounds a tonne, after earlier setting a one-month low of 1,424 pounds a tonne. Raw sugar futures jumped on investor buying, sparked mainly by technically motivated covering in the sweetener, dealers said.
May raw sugar on ICE jumped 1.06 cent, or 4.3 percent, to close at 25.50 cents a lb. The May contract surged above the 200-day moving average at 24.79 cents per lb. On the spot-month basis, the 50-day and 100-day moving averages stood at 24.44 and 24.39 cents. Once the contract raced past those levels, automatic pre-placed computer orders powered the market higher, they said. "The chart is a little bit more friendly," said Country Hedging Inc analyst Sterling Smith. London May white sugar futures jumped $21.10, or 3.3 percent, to finish at $670 per tonne.
Coffee futures felt a slight lift from the weak US dollar, dealers said. May arabicas on ICE closed up 1.70 cent, or 0.9 percent, at $1.8530 per lb, after falling in early trade. ICE arabica dipped to a 17-month low of $1.8105 on Monday and remained technically oversold on the 14-day relative strength index. Benchmark Liffe May robusta coffee futures rose $31, or 1.5 percent, to end at $2,034 a tonne. May's premium to July closed at $30.