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SOFTS-Cocoa falls as I.Coast resolution seen closer

Published 04/05/2011, 11:00 AM
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* Cocoa prices expected to weaken further

* Robusta and arabica coffee exports seen ample

* Raw sugar seen in 26-28 cents/lb range

(Adds trade comment, updates prices)

By Sarah McFarlane and David Brough

LONDON, April 5 (Reuters) - ICE cocoa futures fell around 3 percent on Tuesday before paring losses, as the crisis in top producer Ivory Coast looked close to being resolved.

ICE arabica coffee futures were steady, while raw sugar futures eased, under pressure from a stronger dollar and weaker oil prices.

Ivory Coast's Laurent Gbagbo was negotiating the terms of his departure on Tuesday following a fierce assault by forces loyal to his rival, backed by U.N. and French helicopter airstrikes.

ICE May cocoa was down $60 or 2 percent at $2,960 a tonne at 1413 GMT, after touching a session low of $2,927.

Liffe May cocoa was down 43 pounds or 2.2 percent to 1,913 pounds per tonne.

Dealers said the developments in Ivory Coast could see further losses in the cocoa market.

"I expect prices to weaken but I don't expect them to fall off a cliff... the sell-off that we saw last week reduced an awful lot of the long exposure," Jonathan Parkman, joint head of agriculture at Marex Financial Ltd in London said.

"Since the election, fundamentals have definitely become more bearish, which is important in trying to determine where prices might end up," Parkman said, adding he expects London prices to fall to between 1,700 and 1,800 pounds a tonne.

Dealers voiced concerns over stores of around 500,000 tonnes of cocoa believed to have accumulated in Ivory Coast while exports are banned.

"The cocoa can be used. The problem is the longer it's stored at origin, there's a higher risk of mould becoming an issue and it will probably have to be blended with better quality cocoa,"a Europe-based fund analyst said.

"Once the fighting has stopped, within 10 or 15 days you'll probably get cocoa coming out, vessels are being lined up. San Pedro (port) presumably could start sooner because they ought to be making the preparations now."

The European Union said on Tuesday it was ready to move rapidly in removing sanctions on the Ivory Coast once power is handed over to presidential claimant Alassane Ouattara.

COFFEE EXPORTS

Coffee futures were steady, as the stronger dollar and brisk exports from producing countries weighed.

"If you look at the export figures there have been some pretty big numbers from Vietnam and Indonesia on the robusta side, Brazil is exporting record volumes and there are big numbers coming out of Colombia and Honduras," the fund analyst said. "There doesn't appear to be a shortage."

ICE July arabicas were up 0.65 cent or 0.3 percent to $2.5935 per lb at 1417 GMT, while Liffe July robustas were up $24 or 1 percent at $2,332 per tonne.

ICE raw sugar futures edged lower but remained at the upper end of a recent 26-28 cents a lb trading range, underpinned by delays in harvesting of cane in the centre-south of top producer Brazil.

Pierre Sebag of consultant Sugar K Ltd said the market had become difficult to track at present because of the high intra-day volatility in moderate volumes.

ICE May raw sugar was down 0.12 cent or 0.4 percent to 27.87 cents a lb at 1419 GMT, while Liffe May white sugar was up $8.40 or 1.2 percent to $724.60 per tonne.

Nick Penney of broker Sucden Financial said, "We are testing the upper end of the recent range in both markets (whites and raws) and should there be a failure to make headway, we suspect that given the better medium/long term picture, values may retrace sharply."

* Prices as of 1425 GMT Product Last Change Percent Move End 2010 Ytd Percent ICE sugar 27.82 -0.18 -0.64 32.12 -13.39 ICE coffee 259.00 0.30 +0.12 241.80 7.11 ICE cocoa 2977.00 -62.00 -2.04 3052.00 -2.46 Liffe sugar 724.10 7.90 +1.10 777.50 -6.87 Liffe coffee 2336.00 28.00 +1.21 2097.00 11.40 Liffe cocoa 1907.00 -48.00 -2.46 2029.00 -6.01 CRB index 361.01 -1.17 -0.32 332.80 8.48 Crude oil 108.13 -0.34 -0.31 91.38 18.33 Euro/dlr 1.42 0.00 -0.18 1.34 6.09 * 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

(Editing by Jason Neely)

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