Liffe May cocoa ended 12 pounds higher at 2,114 pounds a tonne on Friday, its highest close since August 9, pushed higher by system funds buying and uncertainty over the supply pipeline from Ivory Coast, the world's top producer. Liffe March robusta coffee closes up $34 at $2,149 a tonne, buoyed by investor buying and a weak dollar.
Robusta has also benefitted from supply tightness in the higher-quality arabica market, which has led some roasters to substitute cheaper robusta in their coffee blends. Liffe March white sugar closes $22.4 higher at $790.7 per tonne, boosted by the overall strength in agricultural commodities, as well as a possible import duty cut in Russia, a leading importer of raw sugar.
The cocoa market's strength triggered system fund buying this week, one analyst said, leaving cocoa set to post its biggest one-week gain since December. The total volume of cocoa trading on ICE hit 34,159 lots, the highest since November 9, preliminary Thomson Reuters data showed.
Dealers said the market ignored a rise in the fourth-quarter North American cocoa grindings. North American cocoa grindings, a key measure of demand, rose 4.64 percent in the fourth quarter of 2010 from a year ago, data from the National Confectioners Association (NCA) showed on Thursday, coming in just above expectations.
"If you look at where the (cocoa) buying is coming from, I don't think it's generated specifically from the fundamentals," said Jonathan Parkman, joint head of agriculture at Marex Financial Limited. "Systems funds are buying up cocoa." The cocoa market has been pushed higher by uncertainty over the supply pipeline from Ivory Coast, the world's top producer, after a bitterly disputed election on November 28.
In coffee, arabicas jumped close to last week's multi-year peak, buoyed by dollar weakness and the limited availability of high-quality Colombian beans. Colombia is seen taking until at least 2013 to bring its coffee output back up to 11 million-12 million 60-kg bags when better weather helps output and new trees resistant to pests begin to bear fruit in two years. In sugar, dealers said the market was also well-supported by a weak dollar as well as the possibility of an import duty cut in Russia, a leading importer of raw sugar.