Cocoa jumps

Cocoa futures trading on European and US markets posted their biggest one-day surge in 10 weeks on Wednesday, after the president of the world's top producer Ivory Coast unexpectedly dissolved the country's government. "Most people have just been fear buying. This was the fuel on the fire to help traders to start buying just on the idea of risk," said Hector Galvan, a senior market strategist for RJO Futures in Chicago.
Ivory Coast's President Alassane Ouattara dissolved his government in a surprise move on Wednesday, citing a lack of solidarity within his coalition cabinet. The country has a volatile history and the cocoa industry often responds to violence and political unrest there by trying to secure supplies.
ICE March cocoa jumped $70, or 2.9 percent, to settle at $2,457 per tonne. The contract fell to $2,322 on Friday, the lowest level for the second month since late July. The December contract's premium to March grew to $11 per tonne from $8 the previous session. The contract moved to a premium on November 12 ahead of its first notice day Friday.
"There are people who are willing to hold the front-month contract and even buy it, especially during periods of risk or fear, so they can take exchange, good-quality beans either for delivery or to set themselves up for near-term deliveries," Galvan said. The effect of the Ivory Coast instability on cocoa prices was not expected to be long term.
"It obviously created uncertainty and whenever there is uncertainty you can expect the market to react in this sort of way," said Jonathan Parkman, joint head of Agriculture at Marex Financial. Ivory Coast, which produces around 35 percent of the world's cocoa, suffered a civil war in 2011 but fears the conflict would threaten the country's cocoa crop proved unfounded with a record crop harvested that year.
Benchmark Liffe March cocoa futures jumped 43 pounds, or 2.8 percent, to end at 1,592 pounds per tonne. Coffee futures moved higher after tumbling around 4 percent on Tuesday to multi-month lows when negative macro sentiment and improved crop weather in Brazil weighed on the arabica and robusta markets. March arabica coffee futures rose 1.50 cents, or 1 percent, to close at $1.5275 per lb. The contract sank to $1.5090 on Tuesday, its lowest since June 19.
January robusta coffee futures closed flat at $1,902 a tonne, after moving to a session high at $1,935. The contract hit $1,897 in the previous session, the lowest for the benchmark second month since February 2. Commodities investment guru Jim Rogers told Reuters on Tuesday that he sees the NYSE Liffe market for robusta coffee futures nearly doubling in size as demand grows, with Asian consumers quaffing more of the traditionally Western drink.
Sugar futures turned lower in thin, range bound dealings. March sugar futures eased 0.11 cent, or 0.6 percent, to close at 19.24 cents a lb. The front month fell to 18.66 cents on Friday, the lowest level for the contract since August 2010. December white sugar on Liffe slipped $6.10, or 1.1 percent, to close at $530.90 per tonne.
Dealers noted that open interest in the front month, which expires on Thursday, was relatively high at more than 18,600 lots or 930,000 tonnes of sugar as of Tuesday's close. The contract was trading at a premium of $15.80 over the March contract on Wednesday.