US cocoa futures closed higher in heavy volume on Wednesday, on September/December spreading while heavy exports out of West Africa contributed to the market's steepest open interest in more than three years. Arabica coffee futures closed lower on chart-based selling while raw sugar inched higher in choppy dealings. Key October raw sugar futures inched up 0.19 cent to finish at 31.13 cents per lb, in an inside day. Market mired in range-bound trade, said dealers.
Diminished cane and sugar production in top grower Brazil seen offset by larger output in other countries. Brokerage Newedge sugar analyst Alex Oliveira said price near 31 cents is appropriate and seems to have priced in lower output in Brazil. Dealings light as players wait for resolution to US debt crisis. Market sources waiting for news of possible cash buying by countries like China or maybe the United States, whose sweetener market is one of the world's largest. India sugar export news on market's radar, said traders.
September arabica coffee futures fell 3.75 cents to settle at $2.4120 per lb. Market extended its losses as the market remained technically bearish after September fell below the 200-day moving average for the first time in 13 months last week, said traders. Arabica fell to the session lows after sell-stops were triggered below $2.40, said traders.
ICE certified arabica stocks rose by 2,520 bags to 1,543,121 bags on July 26, with a light 4,130 bags pending grading, according to ICE data. Key September cocoa futures rose $21 to settle at $3,036 a tonne. September/December spreading, ahead of September's first notice day August 18, boosted volume, with fund longs expected to need to roll in the near future, said traders. The spread settled at a $37 discount, its biggest since May 2010.
Total volume reached 23,459 lots, up 65 percent from the 30-day average, according to Thomson Reuters preliminary data. On Tuesday, total open interest hit the highest level since March 3008 at 174,115 lots, a factor dealers attribute to the increased cocoa stocks in the US, recently narrow arbitrage with the London market and longer than average manufacturers.