ICE cocoa futures rose to a 33-month high on Wednesday, boosted by strong cocoa butter prices and lingering expectations of a supply deficit in the 2014/15 season. Arabica coffee futures on ICE Futures US eased, revisiting the prior day's more than two-month low, while sugar prices dipped lower. Asia cocoa butter ratios hovered near their highest levels since December this week on purchases from chocolate makers.
"Strong butter prices over the last few weeks indicate demand is doing well," said Sterling Smith, a futures specialist with Citigroup in Chicago. Weather worries also supported, dealers said. An El Nino weather event, which forecasters have said is increasingly likely this year, can reduce cocoa production. The front-month July cocoa contract on ICE touched a peak of $3,093, its highest since late August 2011, before settling up $18, or 0.6 percent, at $3,088 a tonne. The September cocoa contract on Liffe rose 12 pounds, or 0.6 percent, to end at 1,948 pounds a tonne. US Easter sales rose 6 percent, more than expected, with chocolate products leading the surge, the National Confectioners Association said on Tuesday.
Still, growing uncertainty over the size of supply deficits has capped the momentum of speculator buying and the rally in both markets. In coffee, front-month July arabica coffee contract on ICE closed down 0.95 cent, or 0.6 percent, at $1.7020 per lb. The front-month earlier matched but not breached Tuesday's low of $1.6735, its weakest since late March.
"The first results of the Brazilian harvest are making the market more optimistic in regard to the current crop," Commerzbank analyst Michaela Kuhl said. The July contract has tumbled 20 percent from a peak of $2.19 a lb set in late April as early industry estimates called for big losses from drought in Brazil and the rising possibility of a global supply deficit after years of excess supplies. September robusta coffee futures on Liffe inched up $1, or 0.05 percent, to close at $1,914 a tonne.
Sugar prices were under pressure as the Brazilian real currency again weakened against the US dollar, which encourages can boost exports as it makes the dollar-traded commodity worth more relative to the local currency. ICE July raw sugar fell 0.15 cent, or 0.9 percent, to settle at 17.04 cents a lb, hovering not far from a late May low 16.95 cents, now technical support. Liffe August white sugar futures ended down $2.10, or 0.4 percent, at $465.40 per tonne.