****NEW YORK/LONDON: Cocoa futures on ICE rose sharply on Friday as the market appeared oversold after a recent weakness and dealers saw signs of improving demand.****
Arabica coffee also jumped. March New York cocoa settled up $98, or 4%, to $2,521 a tonne, rebounding from the prior session’s two-month low of $2,408.
March London cocoa rose 52 pounds, or 3.1%, to 1,705 pounds per tonne?.
Dealers said there were signs of demand recovery and that the market was ripe for a recovery after recent losses.
“Bottom line, cocoa prices are fairly cheap and do not reflect current S&D (supply and demand) outlook,” said Marcelo Dorea, soft commodities analyst at First New York.
“Although observers may disagree as to the size of a deficit out of the 2021/22 season, no one will argue that there isn’t one. In our view, the current season deficit is just about equal to the 20/21 season surplus,” he added.
Grinding data for the fourth quarter to be released in coming days will show that demand continue to recover, he said.
March arabica coffee settled up 6.75 cents, or 2.9%, at $2.3845 per lb??.
Dealers said the outlook for this year’s crop in Brazil remained the focus with unfavourable climate hurting prospects and concern that recent rains had been excessive in some areas.
Rains have flooded coffee fields in central eastern areas in Brazil, the latest in a climate roller-coaster for the country.
Certified ICE arabica coffee stocks were at 1.52 million bags as of Jan. 6, down from 1.6 million a month earlier.
March raw sugar lost 0.14 cent, or 0.8%, at 18.05 cents per lb after falling to a five-month low of 17.99 cents. Dealers said an improving outlook for cane production in Brazil had helped to put the market on the defensive.
Cane harvests in India and Thailand started well and production in both countries could potentially be higher than expected.
March white sugar fell $0.30, or 0.1%, at $485.80 a tonne.