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SOFTS-Arabica ends at 34-year peak, cocoa at 6-week high

Published 04/29/2011, 04:55 PM
Updated 04/29/2011, 05:00 PM
SI
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* May raw sugar expires on Friday

* July cocoa rises above 50 pct Fibonacci retracement

* Arabica underpinned by concerns over tight supplies (Adds monthly performance in paragraph 12, graphic; updates price table)

By Marcy Nicholson

NEW YORK, April 29 (Reuters) - Arabica coffee futures trading on ICE reversed up to close at the highest level in 34 years, while U.S. cocoa ended at a six-week high on Friday, hitting technical buy signals in its best monthly performance in 19 months.

Raw sugar settled at a 6-1/2-month low on supply pressure and as it continued its downtrend on the last trading day of the month.

London-based Liffe soft commodity markets are closed for British holidays on Friday and Monday, and will reopen on Tuesday. ICE Futures U.S. will delay the start of electronic trading for coffee, cocoa and sugar until 7:30 a.m. EDT (1130 GMT) on Monday because of those holidays, it said in a notice.

U.S. cocoa continued higher, following a technical breakout and options-related dealings earlier this week that forced many holding short positions to take cover.

Key July cocoa futures rose $60, or 1.8 percent, to close at $3,340 per tonne, the highest settlement for the second position since March 14.

"I think today we have some nervousness about the slowness of cocoa moving out of the Ivory Coast and the market rebuilding some risk premium," said Sterling Smith, analyst with Country Hedging in Minnesota.

Ivory Coast cocoa exports could resume by next week after a row was resolved over how to make customs payments, two exporters in the world's top grower nation told Reuters on Thursday.

The July contract attracted heavy short-covering on Wednesday after rising above $3,130, but rising open interest shows the rally also attracted new longs to the market in the past two trading sessions. The contract rose above the 50 percent Fibonacci retracement level at $3,323 on Friday, spurring more buying, dealers said.

The second position closed the week up 8.2 percent, the biggest gain since April 2009. It closed the month up 12.6 percent, the strongest month since September 2009.

Arabica coffee futures reversed higher in thin dealings with a lift from investor buying and concern about tight washed arabica supplies, while origin sellers sat on the sidelines, allowing the market to climb easily.

July arabica coffee futures inched up 0.65 cent, or 0.2 percent, to $2.9985 per lb, the highest settlement for the second position since 1977.

Arabica gained 13.5 percent in April, making it the third-best-performing commodity this month, next to U.S. and spot silver. U.S. cocoa was the fourth-best performer with a 13.1 percent gain and raw sugar was second from bottom at a 17.9 percent drop. Cotton fared the worst, down 21.1 percent.

The market remains underpinned by concerns about tight supplies of washed arabica beans, closing the month up 12.4 percent, the biggest monthly gain in four months.

Raw sugar continued to move lower as the market remained focused on the May delivery, which was expected to be heavy, as the spot contract expires on Friday. Open interest for May dropped to 19,306 lots by April 28, down 11,008 lots from the previous day.

The May raw sugar contract fell 0.54 cent, or 2.3 percent, to finish at 23.38 cents a lb. July eased 0.26 cent, or 1.2 percent, to end at 22.25 cents, the weakest settlement for the second position since Oct. 6.

The second position finished the month down 11 percent, marking the third straight month of losses.

"Sugar is caught in a downward trend and I think sugar has more work to do on the downside. We do have the large Brazilian crop coming into the supply chain," Smith said.

The second position has fallen for three straight months. (Editing by Marguerita Choy and Dale Hudson)

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