Markets

Cocoa slips to 4-week lows on technicals, ample supply

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COCOA

July New York cocoa was down $38, or 1.89 percent, at $1,969 a tonne by 1436 GMT, after slipping to $1,956, its lowest since March 13.

July London was down 28 pounds, or 1.72 percent, at 1,596 pounds a tonne, after hitting a four-week low of 1,587 pounds.

Both markets fell sharply on Friday in their biggest one-day loss since Dec. 9. Dealers said the persistent weak momentum triggered further chart-based selling on Monday.

Bearish fundamentals also weighed, with high production seen in top grower Ivory Coast and, increasingly, in number two producer Ghana.

"Either way, we're going to have a massive surplus this year," said one dealer. "The question mark is, how long will it take to be absorbed and is it already in the price."

The market is anticipating European cocoa grind figures later this week, with dealers expecting a small increase but noting it is unlikely to offset oversupply worries.

SUGAR

May raw sugar eased 0.03 cent, or 0.18 percent, to 16.74 cents a lb.

May white sugar fell $1.40, or 0.29 percent, to $482.60 per tonne, with the focus on a contract expiry on Thursday.

Dealers said sizeable open interest ahead of the expiry, coupled with hefty whites and front-month premiums, signalled potential demand for delivery.

The market was also monitoring demand from India and China, as well as increasing pressure on the European Commission to take exceptional measures to alleviate dwindling domestic stocks.

"It is likely that the EU commission may hold out until the next crop, expected to start as early as possible given the abolition of quotas in October, but it is just one more thing to encourage the whites bulls," Nick Penney, senior trader at Sucden Financial, said in a market note.

COFFEE

May arabica coffee rose 0.75 cent, or 0.54 percent, to $1.4080 per lb, while May robusta slipped $4, or 0.18 percent, to $2,166 a tonne.

Rabobank revised its global coffee production forecast for 2016/2017 to 154 million 60kg bags, up from a previously estimated 151.7 million bags. Output for 2017/2018 was seen at 153 million bags, revised down from 155.4 million bags.

 

Copyright Reuters, 2017