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

INTERVIEW-Producer coffee stocks at record low, ICO says

    LONDON, Feb 23 (Reuters) - Coffee inventories in producing countries have reached a record low, the International Coffee Organisation (ICO) said on Wednesday.

   "Today they are at their lowest level in history," said Jose Sette, the executive director of the ICO, adding that coffee stocks in consuming countries would last for another three to four months of consumption.

   He said coffee inventories have been steadily depleted for the past few years as bean supply has lagged demand, with demand in emerging markets growing at more than 4 percent a year.

Source: (Reporting by Anna Yukhananov; editing by Alison Birrane) ((anna.yukhananov@thomsonreuters.com; +44 207 542 1450; Reuters Messaging: anna.yukhananov.thomsonreuters.com@reuters.net))

 

Coffee and cocoa forecast for today & market closing review 23 feb 2011: ICE cocoa hits 32-year high, coffee slips

    * Extension of Ivorian export ban propelled cocoa to peak

    * Arabicas consolidate near highest level in over 30 years

    * Sugar futures fall to reconnect with physical demand

     ICE cocoa hit a fresh 32-year  high on Wednesday on renewed concerns over supplies after the  

Ivory Coast's export ban was extended, while arabica coffee fell  a day after peaking at its highest level in at least 30 years.

    Sugar futures fell below recent three-decade highs as the  market sought to reconnect with physical demand.

    ICE May cocoa futures <CCK1> <CCc2> traded up $50, or 1.4  percent, to reach $3,636 a tonne at 1653 GMT as the extension of  Ivory Coast's export ban increased uncertainty about future  world cocoa supplies.

    Liffe May cocoa <LCCK1> was up 19 pounds or 0.8 percent to  2,357 pounds ($3,817) per tonne, having earlier touched a  seven-month peak of 2,361 pounds per tonne.

    "Until now the trade have seemed reasonably relaxed, but  this (Ivory Coast ban) doesn't look like being solved easily and  uncertainty is what spooks markets," a UK-based analyst said. 

    "Now it looks like the ban has been extended, so the farmers  and the exporters must be getting distressed as well as those  who have bought the cocoa for manufacturing and processing," the

analyst said. 

    Gunfire and explosions shook an area of Abidjan that  supports Ivorian presidential claimant Alassane Ouattara on

Tuesday, and at least three soldiers died in clashes with  protesters calling on his rival to step down.

    Declared purchases by private cocoa buyers to Ghana's  industry regulator, Cocobod, reached 693,074 tonnes by Feb. 10,  up 40.42 percent by the same point in the previous season,  industry sources said on Tuesday. [ID:nLDE71L2GB]

    New York cocoa <CCc2> will extend gains substantially to  $3,746 per tonne, based on its wave pattern and a Fibonacci  projection analysis, according to Reuters analyst Wang Tao. ]

    

    COFFEE, SUGAR

    Arabica prices eased, after trading at the highest level in  at least 30 years on Tuesday, as a shortage of high quality  beans continued to support prices. 

    "Any end-users who haven't covered by now will be in  distress," the UK-based analyst said.      Arabica prices have more than doubled since June 2010,  underpinned by lower-than-expected output in high quality  arabica producer Colombia for three consecutive crops.

    "The focus still seems to be on the lack of tenderable  material for New York," the analyst said.

    ICE May arabica coffee <LRCK1> traded down 0.5 cent or 0.2  percent at $2.7385 per lb at 1700 GMT.

    Liffe May robusta coffee <LRCK1> traded up $2 at $2,384 per  tonne in moderate volume of 7,475 lots.

    Robusta coffee prices in Vietnam stayed near record highs on  Wednesday, with farmers continuing to hold on to remaining thin  stocks on hopes of further gains, traders said. [ID:nHAN125162]

    New York coffee <KCc2> will rise to $2.82 per lb as the  uptrend is intact, even following a retracement to $2.7035 on  the hourly chart, Reuters analyst Wang Tao said. [ID:nL3E7DN0NS]

    Sugar futures prices fell, trading at below 30-year highs  due to tight global supplies, as the market sought to reconnect  with physical demand.

    ICE March raw sugar futures <SBH1> were down 1.01 cent or  3.3 percent, at 29.95 cents a lb at 1701 GMT. London May white  sugar <LSUK1> was down $23.0 or 3.20 percent at $696.0 per tonne  in slim volume of 3,950 lots.

    "The sugar fundamental situation still seems to favour the  bulls, and we continue to see dips as buy opportunities," said  Thomas Kujawa of broker Sucden Financial.

    Indonesian state plantation PT Perkebunan Nusantara X failed  to secure white sugar for the third time in a tender, seeking to  buy 43,400 tonnes, said a tender official on Wednesday.

    While the firm said the tender was annulled when a supplier  failed to meet its requirements, traders said that buyers were  hoping for lower prices.

    "I think we are seeing demand deferral rather than demand  destruction at this stage, although that may change if prices  return to the highs and beyond," the UK-based analyst said.

Source:   ((sarah.mcfarlane@thomsonreuters.com; Reuters Messaging:  sarah.mcfarlane.thomsonreuters.com@reuters.net))

 ($1=.6174 Pound)

   

Cuckoo for cocoa futures

Cocoa is building bullish technical energy highlighted by an ascending wedge formation that reflects a coiled spring preparing to release an explosive move. The MACD recently has triggered a buy signal, increasing the odds of a breakout over the next several months (see “Hot chocolate”).

The breakout, should it occur, will be explosive, but the technicals are not the only reason to be bullish cocoa. The long-term structural supply/demand imbalances that have created a series of recent deficits are not going away anytime soon. In 2010, Mother Nature was unusually kind but, because of the aging tree population in the Ivory Coast and the depleted soil content in Ghana, such favorable weather will not produce record crops and likely will produce a global deficit in 2011.

Recently, many high profile cocoa analysts have downgraded global cocoa production as good weather was overplayed and the deleterious effects of decades of lack of investment in the cocoa industry were underemphasized in their analyses, leading to overly optimistic global production expectations.

The International Cocoa Organization (ICCO) recently has increased deficit expectations for the 2009-2010 marketing season. The likely probability for 2011 is that weather becomes normal to adverse and sets global cocoa production back into a major tailspin, leading to shortages of high quality cocoa. With demand for this kind of cocoa strong and demand growth expected apace, record highs are a matter of when, not if.

We have seen the cocoa market move well above $3,000 per ton over the last several years without generating the kinds of investments that are desperately needed to rejuvenate long-term global production. Additionally, there has been very little demand degradation during these spikes. It will take much higher prices to accomplish a more balanced cocoa trade, especially against the increasingly economically competitive alternative markets for growers, such as rubber, palm oil and coffee.

Is it any wonder that processors and merchants have loaded up on cocoa futures to hedge against a likely price spike in future years? The people that know more about the cocoa trade than anyone else see much higher prices on the horizon.

Commercial operators tend to hold near-record long positions at major bottoms as they rush in to protect upside price risk. If you look at the times that commercial net longs have risen to the levels we have today, they have been followed by bull moves. It has been profitable for investors to follow the commercial net positions and buy when they have become historically long.

With Intercontinental Exchange US (ICE) certified warehouse cocoa stocks being drawn down over the last six months to some of the lowest levels seen since 2009, and with near record cash premium differentials against futures, the fundamentals remain very bullish. Add that to the bullish technical and commercial signals, and cocoa can make an historic move.

Another piece to consider when analyzing potentially major turning points is relative value. For cocoa, two of the most important relative value measures — the cocoa/CCI (Continuous Commodity Index) price ratio and the cocoa/sugar price ratio — are flashing major long-term buy signals. Both measures are at some of the lowest levels seen over the last 40 years, and low levels typically have preceded major bull market moves.

Cocoa has a history of being a rogue commodity with, at times, very little correlation to the rest of the commodity complex. This is important as we may be facing an extended commodity correction, but the cocoa market could still see a major bull run.

The initial margin requirement for cocoa futures is $1,610 per contract, making it one of the more affordable commodities to trade. Front-month cocoa closed at $2,758 on Dec. 1. A trader could get long in that area with a protective stop placed at the Sept. 13 low around $2,600, proving a better than 3:1 risk/reward ratio. A tighter stop can be utilized following the bottom trendline which, as long as it holds, supports a long position. Look for opportunities to buy March 2011 cocoa on any correction that takes prices under $2,800 for an eventual move up to the $3,400/ton area in 2011.

With the technicals, fundamentals, commercials and relative value measures all aligning with historical bullish signals, investors should take notice. And given cocoa’s history of independence, it could be the one commodity to buy in the first part of 2011.

source: http://www.futuresmag.com/Issues/2011/January-2011/Pages/Cuckoo-for-cocoa-futures.aspx

Colombian Coffee Group Sees ‘Very Good’ Crop in Main Areas

Colombia, the second-largest arabica coffee-bean producer, said flowering in recent weeks in major growing areas will ensure a “very good” year-end harvest.

Year-end production will rebound in the most important provinces of Antioquia, Quindio, Caldas and Risaralda, ensuring the annual harvest will surpass last year’s 8.9 million bags, Colombia’s National Federation of Coffee Growers Chief Executive Officer Luis Genaro Munoz said in an interview in Bogota.

“The production is there,” he said yesterday. “I frankly didn’t sleep until Friday. Friday and Saturday the flowering was completed” in the central growing areas, he said.

Above-average rainfall hurt coffee trees last year, prompting a decline in exports and a surge in prices. Coffee doubled in the past year, making it the second-best performer among 22 commodities tracked by the Bloomberg CRR Futures List.

Arabica coffee for May delivery gained 1.35 cents, or 0.5 percent, to settle at $2.7435 a pound at 2 p.m. on ICE Futures U.S. in New York. The price earlier declined as much as 2.65 cents to $2.7035.

Production in Huila, Colombia’s second-largest growing province after Antioquia, will rise in the first six months of the year, Munoz said. Huila, which produces beans brewed by companies including Starbucks Corp., and other nearby growing areas had less severe rainfall than areas farther north, where precipitation in some cases was four times average last year, Munoz said.

Stalled Recovery

Damage in those areas to flowering last year will cause a recovery in the nationwide crop to stall in the first half, he said.

Colombia aims to increase production as it accelerates plans this year to sow more disease-resistant coffee varieties, Munoz said. A disease caused by fungus, known locally as roya, that attacks plants probably peaked last year, Munoz said.

Last year, exports slid by 78,000 bags to 7.82 million bags. Output in 2010 fell short of the 9.5 million bags forecast in October by the federation. A bag weighs 60 kilograms (132 pounds). Brazil is the largest producer of arabica beans. 

source: http://www.bloomberg.com/news/2011-02-22/colombian-coffee-group-sees-very-good-harvest-in-main-areas.html

Ivory Coast Cocoa Exporters Told to Stop Shipments for a Month by Ouattara

Cocoa exporters in Ivory Coast, the world’s biggest producer of the beans, have been ordered to suspend all cocoa and coffee shipments for a month, according to the government of president-elect Alassane Ouattara.

The halt in exports runs from tomorrow to Feb. 23, according to an e-mailed statement from the office of Prime Minister Guillaume Soro and signed by Ouattara’s Justice Minister Jeannot Ahoussou. Cocoa rose to an 11-month high in New York on Jan. 21 on speculation that steps to remove the incumbent president will disrupt exports.

“Last week we had a meeting with the main cocoa exporters in Ivory Coast and they have agreed to suspend exports for a month,” said Malick Tohé, an adviser to Ouattara’s government, in a phone interview from Abidjan today. All exporters have agreed to halt shipments, he said.

The export ban is meant to cut off the rival government of incumbent President Laurent Gbagbo from export revenues of the beans, Tohe said. Ouattara’s government “‘does not have control over exports revenues right now,” he said. “They go straight to the National Coffee and Cocoa Management Committee, which is in the hands of Gbagbo,” he said.

While the United Nations, the U.S. and African leaders recognize Ouattara as the winner of the Nov. 28 elections, Gbagbo has refused to step down, alleging voting fraud in northern states.

Cocoa Production

Ivory Coast’s cocoa production accounts for a third of global production, and is forecast to be 1.9 percent larger than a year ago, according to Macquarie Group Ltd. Shipments by farmers to the country’s ports from the latest harvest are about 2 percent below last season, the bank said on Jan. 19.

On Jan. 15, the European Union imposed sanctions to block trade between the EU and Ivory Coast by barring financial transactions between Europe and any of the people or entities on the sanctions list, which include the ports of Abidjan and San Pedro. Shippers are allowed to continue to buy cocoa beans in the interior of the country, Tohé said.

The Professional Group of Ivory Coast Coffee and Cocoa Exporters was not available for comment when called by Bloomberg News today. 

source: http://www.blogger.com/post-create.g?blogID=5905603925638069516