New York cocoa futures on ICE pared losses after falling more than 3 percent on Monday, rebounding from session lows on a wave of short-covering and fresh buying on the last trading day of April. July New York cocoa settled down $6, or 0.2 percent, at $2,825 per tonne, after falling to $2,739.
The second-position contract closed April up 9.3 percent, its fourth straight higher month after rising to a 1-1/2-year high at $2,943 as expectations eased for a global surplus. "There has been a disconnect from fundamentals," one dealer said. "The way this market was performing and the way the specs were acting, you'd think there's already a deficit."
Prices initially fell as the market reacted to technically overbought levels and data late Friday that showed speculators had raised their net long position to a 2015 high, signalling there may be limited room for further buying, traders said. The bulk of the session's volume was in the benchmark contract as prices bounced sharply above the session low, with traders pointing to short-covering as well as new long positions lifting prices.
The drop in New York cocoa slightly weakened its premium over the London market, which recently rose to a 41-year high. July London cocoa settled up 13 pounds, or 0.7 percent, at 1,905 pounds per tonne.
May raw sugar closed up 0.3 cent, or 2.7 percent, at 11.52 cents per lb as it expired at the end of the session. The spot contract closed down for the second straight month. Most-active July settled up 0.23 cent, or 2 percent, at 11.75 cents per lb.
While producer hedging prevented stronger gains, dealers attributed the firmness to a combination of chart-based buying after holding last week's technical support level and light buying from the industry. "The slight recovery in the markets can be put down to a developing oversold technical condition," Nick Penney, senior trader at Sucden Financial, said in a market note. "This may purely be temporary but is a welcome respite for the bulls nonetheless."
August white sugar settled up $3.20, or 1 percent, at $330.80 per tonne. July arabica coffee settled up 0.4 cent, or 0.3 percent, at $1.228 per lb. The second-position contract closed the month up 2.2 percent, its strongest performance since July 2017. July robusta coffee settled down $6, or 0.34 percent, at $1,756 per tonne.
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