Cocoa futures on ICE extended their steep rallies on Wednesday, with the New York market reaching a 16-month high and London a 14-month top on fund buying and concerns about diminished crop outlooks in the world's top growers Ivory Coast and Ghana. May New York cocoa settled up $24, or 1 percent, at $2,556 per tonne, after rising to $2,581, the highest for the second position since November 2016.
Prices were buoyed by fund buying as crop outlooks in Ivory Coast and Ghana diminish, dealers said. The Moving Average Convergence Divergence (MACD), a momentum indicator, continued to rise but reached an approximate level where the second-position contract has peaked and then turned lower six times since 1981. May London cocoa settled up 18 pounds, or 1 percent, at 1,794 pounds per tonne after rising to the highest since January 2017 at 1,806 pounds.
The March London contract expired on Wednesday and settled at a 7 pound discount to May in sharp contrast to its 37 pound premium the prior session. The spot contract rallied this month due to a scarcity of quality West African beans in Europe. "Clearly we've had a sharp slowdown in Ivory Coast arrival numbers over the last couple of weeks - and very strong bean differentials," said one dealer.
However, March open interest fell by 12,138 lots to 8,418 lots on Tuesday. May raw sugar settled up 0.14 cent, or 1.1 percent, at 12.76 cents per lb. Prices bounced up from the prior session's 8-1/2-month low of 12.53 cents, a level of technical support as the spot contract failed to fall below it three consecutive days in June 2017.
Rising production in India and Thailand kept the market on the defensive although a decline in output in Brazil should limit stocks, dealers said. Brazil's center-south, the world's largest sugar producing region, is expected to crush the smallest amount of cane in five years from the new crop that kicks off in April, as aging fields lead to lower yields, consultancy Datagro said.
May white sugar settled up 20 cents, or 0.06 percent, at $353.90 per tonne. May arabica coffee settled down 0.5 cent, or 0.4 percent, at $1.2105 per lb. Rabobank reduced its 2018/19 global coffee surplus forecast due to lower production expectations in top grower Brazil. May robusta coffee settled down $11, or 0.6 percent, at $1,752 per tonne.