Cocoa futures on ICE reversed course on Wednesday after climbing to their highest in more than five weeks, as short-covering petered out after lifting prices around 8 percent over the past three sessions. The May London contract settled down 13 pounds, or 0.8 percent, at 1,683 pounds per tonne, after peaking at 1,708 pounds. May New York cocoa futures settled down $10, or 0.5 percent, at $2,048 per tonne, after tapping $2,079.
The session highs were the highest for the second position contracts since February 6.
Dealers said the market's recent run-up had been largely driven by technical factors and global oversupply with a large surplus widely forecast for the current 2016-17 season.
"This is a correction in a bear market," said Nick Gentile, managing partner of commodity trading advisor NickJen Capital. The brief shift of the New York May contract to a small premium over July futures on Tuesday also "spooked" speculators, Gentile said.
= Cocoa grinding companies in top grower Ivory Coast said they are rejecting between 30 and 50 percent of beans because of high acidity levels. May raw sugar futures settled up 0.07 cent, or 0.4 percent, at 18.23 cents per lb. The market traded in a narrow range and hovered above last week's three-month low for the third straight session. Societe Generale in a report increased its estimate for a global 2016-17 sugar deficit to 3.8 million tonnes from 2.4 million and cut its global 2017-18 surplus forecast to 5 million tonnes from 5.9 million.
May white sugar settled up $1.20, or 0.2 percent, at $513.80 per tonne. In Brazil, dealers noted heavy rains were causing some transport delays, which could be worsened by a planned national port workers' strike on Wednesday. May arabica settled down 0.35 cent, or 0.3 percent, at $1.409 per lb, while May robusta settled up $11, or 0.5 percent, at $2,180 per tonne.
Brazil will harvest 36.7 million bags of arabica in the 2017-18 crop year, down from 42 million in 2016-17, Rabobank forecast in a report. "With a lower prospect of arabicas for this year and with our expectations for the (Brazilian) real to remain rather stable ... we therefore feel comfortable with a price forecast for 1H 2017 above the current market," Rabobank Senior Commodity Analyst Carlos Mera said in the report.