Coffee and cocoa forecast for today & Market closing 24 feb 2011

* Cocoa slips from peak but outlook remains bullish

    * Arabica coffee also retreats from multi-year high

    * Raw sugar rebounds as crude oil surges

    NEW YORK/LONDON, Feb 24 (Reuters) - ICE cocoa futures closed quietly  lower after building in a bit more of a risk premium and hitting a 32-year  high on Thursday as tensions mounted over supplies from top producer Ivory  Coast.

    Arabica coffee futures finished lower in its weakest two-day  performance in a month, falling from the highest level in more than 30  years on investor liquidation.

    Sugar futures, however, bounced after Wednesday's losses, feeling a  lift from the strong crude oil futures market. Sugar is used to make  biofuel.

    The cocoa sector in Ivory Coast has been sucked into a post-election  power struggle that threatens to reignite civil war, as terrified residents  fled shooting in an Abidjan neighborhood and fighting erupted in Ivory  Coast's west.

    "If demand increases against the current backdrop in Cote d'Ivoire  (Ivory Coast), then markets could rally further," Abah Ofon, analyst at  Standard Chartered Bank, said.

    ICE May cocoa <CCc2> inched down $6 to settle at $3,625 per tonne,  after touching $3,645, the highest since January 1979.

    The market remained in backwardation, when nearby contracts are more  expensive than deferreds, typically indicating supply tightness or  concerns. The May premium a $65 compared to July <CCN1>, slightly wider  than $64 Wednesday.

    "I think (the risk premium) is now fully into the market so the  question now is where do we go from here," one veteran U.S. cocoa dealer  said.

    "A lot of the shorts have no money in the market right now. They've  been selling, selling, selling and the market's been going against them, so  you start to worry about the health of the shorts in the market."

    Liffe May cocoa <LCCc2> finished down 7 pounds 2,350 pounds per tonne,  having earlier hit a 7-month high of 2,368 pounds per tonne. The May  premium closed at 76 pounds, from 83 pounds on Wednesday.

    Coffee prices fell, with arabicas slipping well below the peak of  $2.784 a lb hit on Tuesday, the highest level in over 30 years, as  investors liquidated long positions after follow-through buying faded away,

dealers said.

    ICE May arabica coffee <KCc2> dropped 4.80 cents or 1.8 percent to close at $2.6465 per lb. Liffe May robusta coffee <LRCK1> finished down $39  at $2,329 per tonne.

    Total open interest fell to a one-year low at 125,045 lots on Feb. 23, down 1,283 lots from the previous day, ICE data showed.  

    A shortage of high quality arabica beans has fueled the coffee rally,  after key producer Colombia saw several consecutive smaller crops, causing  a drawdown of stocks.

    Colombia's coffee production this year is expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps  flowering, the country's coffee federation said.  

    "News from Colombia regarding the health of the crop has been  encouraging but the market will prefer to see this in physical stocks,"  Ofon said.

    Dealers said that coffee roasters have been increasing the use of  cheaper robusta coffee in their blends where possible.

                                                          

    MORE REALISTIC SUGAR PRICES

    ICE raw sugar bounced after Wednesday's sell-off, as dealers eyed  expiry of the March contract <SBH1> on Monday, and as the strong crude oil  market helped lift prices. Sugar can be processed into the alternative  energy source ethanol.

    Oil surged to 2-1/2-year highs near $120 a barrel as the revolt in Libya choked exports, then eased as Saudi Arabia assured European refiners  the kingdom could step in to fill any supply shortfalls. [O/R]

    ICE most-active May raw sugar contract <SBK1> rose 0.47 cent to end at 27.83 cents per lb, after hitting a session low at 26.90 cents, the lowest  since Dec. 30, 2010.

    Liffe May white sugar <LSUK1> ended up $2.40 at $705 per tonne.

    "After the market fell yesterday, we are at more realistic levels. There has been a lack of physical offtake," said a London-based sugar  futures dealer.

    Sugar futures were also supported by news that the European Union has  ditched plans for a reduced-duty tendering process for sugar imports, in favor of a fixed 300,000-tonne import quota with duties set at zero.

* ICE sugar and ICE coffee in cents per lb, ICE cocoa, Liffe sugar and

Liffe coffee in dollars per tonne. Liffe cocoa in pounds per tonne.

    Source:  (marcy.nicholson@thomsonreuters.com; +1 646 223 6043; Reuters  Messaging: marcy.nicholson.reuters.com@reuters.net))

Ivory Coast Violence Rises as Ouattara Loyalists Say They Attacked Army

Violence is escalating in Ivory Coast as an armed group claimed responsibility for its first attack on government troops in the commercial capital, Abidjan.

The Liberation Movement of the Population of Abobo-Anyama said 27 people were killed in the assault late on Feb. 22. The army put the figure at eight, including one soldier and seven people it described as rebels.

The attack by the group, which is named after two neighborhoods of Abidjan that support President-elect Alassane Ouattara, represents a new twist in violence that has marked the world’s top cocoa producer since a disputed election on Nov. 28 left it with two rival administrations. While the international community recognizes Ouattara as the winner, incumbent President Laurent Gbagbo refused to resign, citing alleged voter fraud.

Security forces returned to Abobo yesterday afternoon in a large-scale operation, residents said.

“Police came into the neighborhood around 4 p.m.,” Ladji Soumahoro, who lives in Abobo, said by phone yesterday. “They were firing everywhere. Everybody was scared, they stayed at home, scared of being hit by a random shot.”

Mediation Attempt

An African Union-sponsored mission to Ivory Coast, including the presidents of South Africa, Tanzania, Mauritania and Chad, completed a two-day visit to the country on Feb. 22.

The mission could be the “final attempt” by the regional bloc for a peaceful resolution to the crisis, said Kenyan Prime Minister Raila Odinga, who tried at least twice previously to mediate in the impasse.

The Economic Community of West African States is holding planning meetings and “marshaling forces” to remove Gbagbo from power if sanctions and talks fail to convince him to step down, Odinga told reporters yesterday in Nairobi, the Kenyan capital.

“If all these measures don’t result in a change of regime, force will be used,” he said. “As to when, I cannot say.”

At least 300 people have been killed in clashes since the political struggle began almost three months ago, according to the United Nations. In the west of the country, Amnesty International estimates 70,000 people have fled their homes amid ethnic tensions that have been exacerbated by the impasse.

The country’s financial system has come under increasing pressure as at least 10 lenders have closed their doors. The West African regional central bank ordered lenders to halt transactions with its agencies in Ivory Coast after Gbagbo seizer their offices.

Cocoa Ban

Ouattara, who on Jan. 23 told cocoa and coffee shippers to halt exports for a month, this week extended the ban until March 15. May-delivery cocoa climbed for the fourth straight day in London yesterday, adding 19 pounds, or 0.8 percent, to 2,357 pounds per metric ton.

In the 14 days to Feb. 17, exports of cocoa beans and processed cocoa products fell to 8,645 tons, according to an official with access to the data. In the two weeks previous, shipments were 71,457 tons, said the official, who declined to be identified because the data are confidential.

source : http://www.bloomberg.com/news/2011-02-24/ivory-coast-group-claims-attack-on-army-as-violence-escalates.html