Cocoa futures on ICE rose for the sixth straight day on Friday, marking their strongest weekly performance since September on chart-based buy signals and concerns about how Olam International's expansion will impact supplies. Sugar turned down a shade, while arabica coffee rose for the second straight day, continuing to consolidate after falling to a 4-1/2-month low this week.
Cocoa futures extended their gains on short-covering and technical buy signals after the New York market soared above the 50-day moving average in the prior session when the London market broke above its 100-day moving average. On Friday, it attracted more buying after breaching its 50 percent Fibonacci retracement level at 1,988 pounds. London March cocoa settled up 19 pounds, or 1 percent, at 1,988 pounds a tonne, closing the week up 5.3 percent.
New York March cocoa ended up $15, or 0.5 percent, at $2,980 a tonne, closing the week up 4.3 percent, the strongest performance since September. Earlier this week, Olam said it is buying rival Archer Daniels Midland's cocoa processing business, raising concerns about supplies. In sugar, prices turned lower after buyers moved to the sidelines. March raw sugar finished down 0.01 cent, or 0.07 percent, at 14.98 cents a lb, having touched 14.62 cents on Wednesday, the lowest since September 24.
A soft Brazilian real currency stoked Brazilian producer sales of dollar-denominated sugar in order to maximise returns in local currency. "The real stands out as a key factor driving sugar prices," said Michael Liddiard, consultant with Agrilion. Traders focused on Friday's Commitments of Traders (COT) report, with dealers expecting it to show a large net short by the speculative community, potentially adding to buying pressure.
"The consensus for sugar seems to be weaker levels going forward, but we have the overhang of the heavily net fund short position already in the price," said Tom Kujawa, co-head of the softs department of Sucden Financial Sugar. March white sugar closed down 30 cents, or 0.08 percent, at $390.90 per tonne, holding above Wednesday's contract low of $383.00.
March arabica finished up 0.3 cent, or 0.2 percent, at $1.7725 per lb, consolidating after Wednesday's tumble, under pressure from an estimate from Volcafe, the Swiss-based coffee division of commodities house ED&F Man, for a larger Brazilian crop in 2015. March robusta coffee closed down $13, or 0.7 percent, at $1,929 a tonne.
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