NEW YORK/LONDON, April 15. 2011 - Cocoa prices rose on Friday, on reports showing that processors had utilized capacity around the world, compensating for interrupted supply from top grower Ivory Coast.
Arabica coffee futures climbed closer toward last month's 34-year peak, and raw sugar bounced after three weak sessions, joining a rally in other other commodities on positive U.S. consumer sentiment and Chinese economic growth data. First-quarter 2011 cocoa grindings, a traditional measure of demand, rose in Malaysia, North America and Europe, partially compensating for lost processing capacity in Ivory Coast, where post-election civil strife held up exports in the
last several months.
New York's July cocoa contract on ICE Futures U.S. closed up $30, or 1.4 percent, at $3,157 per tonne, closing the week up 5.8 percent, its biggest weekly gain in 13 weeks.
It was first notice day for May, which surged $114, or 3.6 percent, to finish at $3,239 per tonne, an $82 premium to July, the highest for the spot contract since February 2009, from a $2 discount Thursday.
Volume in May was a light 521 lots, and dealers said it rallied on speculators who got caught short. Total volume was just above 8,000 lots, the lowest since March 24, preliminary Thomson Reuters data showed.
Total open interest in U.S. cocoa futures fell to a 12-week low on Thursday, the day Ivory Coast's President Alassane Ouattara formally lifted a nearly three-month ban on cocoa and coffee exports.
London's July cocoa rose 19 pounds to close at 1,979 pounds per tonne.
"Everybody expects Ivory Coast infrastructure will be up and running pretty soon, as for the banking system we don't know yet, that's the big question," a European trader said.
"We need the banking system to be up and running to start exporting."
Dealers were awaiting information on the state of the country's future output, particularly the upcoming mid-crop.
Hector Galvan, senior market strategist for brokerage RJO Futures in Chicago, said the day's climb was mostly technical as U.S. cocoa ignored the weak pound and remained between the 100-day and 200-day moving averages.
"The sell-off is giving people reason not to sell it as much because they don't want to sell the lows either," Galvan said, referring to the 22 percent fall from a 32-year high in March.
LACK OF COFFEE HEDGING
Arabica coffee prices were strong as dealers said there was a lack of hedging to cap upward moves.
"Every coffee growing nation seems to be having some type of coffee issue. I think it's going to give people a reason to try to test the $3 level in the July coffee very soon," Galvan said.
New York's July arabica contract jumped 5.95 cents or 2.1 percent to settle at $2.9110 per lb. It was within sight of the 34-year high hit on March 9 at $2.9665, basis second position.
London's July robusta coffee contract closed down $1 at $2,468 per tonne.
"Traders are reluctant to take on much commitment, particularly on arabicas because of the high cost of finance on the margins for the exchange. Plus there's counterparty risk if the market goes up," one London-based broker said.
ICE raw sugar futures rebounded after being oversold on Thursday, and closed up 0.15 cent at 24.59 cents per lb.
Dealers said they expected a large delivery tonnage against expiry of the Liffe May white sugar futures contract on Friday, possibly around 500,000 tonnes, likely to include Brazilian,
Thai and Indian sugars. The announcement of the delivery details is expected on Monday.
"The key support for the market seems to be the 23 cent level on the July and the bears will want to settle the market below this level," said Thomas Kujawa of brokerage Sucden Financial.
The Liffe May contract rose 70 cents to settle at $697.90 per tonne.
Source : reuters
