New York cocoa soars to six-week high

New York cocoa futures on ICE rose on Tuesday to the highest level in nearly six weeks boosted by a weaker dollar, chart-based buy signals and concerns that dry weather could curtail production in top grower Ivory Coast in the upcoming 2015-16 season. Raw sugar futures extended losses in a selling spree during the settlement window, surprising traders, while arabica coffee hovered above a 1-1/2-year low. The US markets reopened after the Labour Day holiday on Monday.
December New York cocoa settled up $52, or 1.6 percent, at $3,220 per tonne after peaking at $3,230, the highest level for the second position since July 31. Traders said technical buy signals continued to attract fund buying after a breach of $3,148 on Friday, when total open interest surged by more than 7,000 lots to 182,869 lots, a one-month high.
Though heavy rains prompted concerns about crop disease in some of Ivory Coast's cocoa-growing regions last week, there are concerns its 2015-16 main crop could see a significant fall due to dry weather hampering crop development in some regions. A presidential election is also due to be held in Ivory Coast next month. A civil war broke out after the last presidential election in 2010. "I think there are concerns about rainfall and political problems with the run-up to elections. These have overridden macro weakness and what that means for global demand down the road," one London dealer said.
The dollar was weaker as expectations that the Federal Reserve will raise interest rates faded and this also provided some support for contracts denominated in the US currency. London December cocoa closed steady at 2,171 pounds. October raw sugar settled down 0.2 cent, or 1.8 percent, at 11.07 cents per pound, with 20 percent of the session's volume taking place in the last 10 minutes of trade when the price quickly fell to the session low of 11.05 cents.
Dealers said October could continue to be pressured as index funds roll long positions into March. October white sugar, which expires next week, settled down $3.30, or 0.9 percent, at $344.60 per tonne. Arabica coffee edged higher, supported partly by a rise in the value of Brazil's real against the dollar. December arabica coffee settled up 1.85 cent, or 1.6 percent, at $1.21 per pound, still near last week's 1-1/2 year low of $1.1775. November robusta coffee futures settled up $11, or 0.7 percent, at $1,592 per tonne.