Cocoa rebounds

Cocoa futures turned higher after hitting a 3-month low on Wednesday in what some called a knee-jerk reaction to a strong earthquake off Indonesia, the world's third-biggest cocoa producer. May/July cocoa spreads were active on ICE. Coffee rose in the wake of the quake as well. Raw sugar inched up, respecting strong support at its 100-day moving average.
"Both coffee and cocoa had a knee-jerk reaction to the upside," said James Cordier, senior analyst of brokerage Optionsellers.com in Florida. A powerful 8.6 magnitude earthquake and strong aftershocks struck off Indonesia on Wednesday. Along with cocoa, Indonesia grows both arabica and robusta coffee beans.
July cocoa on ICE closed up $34, or 1.6 percent, at $2,104 per tonne, having dipped early in the session to $2,056, the lowest for the second month since January 9. Heavy May/July spreading continued ahead of May's first notice day on April 17, closing at a $1 discount from $6 on Tuesday.
Dealers said an improved outlook for the mid-crop in top cocoa grower Ivory Coast had contributed to earlier price weakness. Analysts saw no significant impact to the global cocoa supply from the quake. "It would be tenuous to say that there is a link to the earthquake," said Keith Flury, a senior soft commodities analyst with Rabobank. "There could be a knee-jerk reaction to buy when prices are so low."
Jonathan Parkman, joint head of agriculture at broker Marex Spectron, said he believed the rise in ICE cocoa futures prices was not likely to be due to the quake. London July cocoa finished up 1 pound at 1,390 pounds ($2,200) a tonne after hitting a three-month low at 1,375 pounds.
Raw sugar futures on ICE were little changed on Wednesday, consolidating after a larger-than-expected Brazilian crop forecast that triggered a sell-off in the prior session. May rose 0.08 cent to close at 23.95 cents a lb, finding strong support at the 100-day moving average at 23.81 cents. Brazil's government crop supply agency Conab said on Tuesday Brazilian sugar production should rise 5.3 percent to 38.9 million tonnes in 2012/13.
The forecast was larger than expected after several analysts had reduced their Brazil 2012/13 outlook due to prolonged dry weather in the top producer, and helped push the market to a one-month low on Tuesday. London May white sugar futures fell $1.30 cents to finish at $628.80 per tonne.
May arabicas on ICE gained 2.50 cents, or 1.4 percent, to close at $1.8065 per lb, bolstered in part by the soft dollar. A weaker greenback makes dollar-denominated commodities cheaper in terms of alternative currencies. "The May is coming up to expiry and will become deliverable at the end of this month, so much of the action today is in the spreads of people rolling positions forward out of May and into July," a London-based coffee futures broker said. Benchmark Liffe May robusta coffee futures settled up $34, or 1.7 percent, at $2,009 per tonne.