📈 Fed's first cut since 2020: Time to buy the dip? See Tech-focused stock picksUnlock AI Picks

SOFTS-Cocoa pares gains as Ivory Coast crisis escalates

Published 04/04/2011, 12:28 PM
Updated 04/04/2011, 12:40 PM
FLG
-
BIG
-

* Coffee falls on investor liquidation

* Traders keep close eye on Brazil sugar harvest delays

* Cocoa industry cover seen comfortable - trade (Recasts, adds analyst comments, graphics, price table, byline, dateline, was LONDON. Updates prices)

By Marcy Nicholson and Sarah McFarlane

NEW YORK/LONDON, April 4 (Reuters) - Cocoa futures were little changed after climbing earlier on Monday, as many waited out the latest assault by presidential claimant Alassane Ouattara to remove Laurent Gbagbo in top grower Ivory Coast, which underpinned the market.

Forces backing Ouattara began a fresh assault to remove Gbagbo from his last stronghold in Abidjan while France ordered more troops into the West African country to protect civilians.

Sugar futures rose on investor buying supported by other commodity markets, and coffee fell on investor liquidation, bringing the premium of the robusta's spot contract down more than 80 percent from last month's peak.

Cocoa prices pared earlier gains after market expectations of a resolution to Ivory Coast's conflict were not met, and as ICE futures held key support and saw a volume boost from May/July spreading ahead of the spot contract's first notice day April 15.

"We're seeing a continuation to the upside just on technical buying," said Boyd Cruel, softs analyst for Vision Financial Markets in Chicago.

Strong support at $2,900-$2,925 per tonne, basis May, kept the market firm after falling nearly 23 percent from the March 4 32-year high at $3,775.

ICE May cocoa futures were down $8 at $3,003 a tonne by 1608 GMT. Liffe July cocoa settled up 5 pounds at 1,955 per tonne.

"On Friday some big cities were being controlled by Ouattara's soldiers and everybody was expecting Abidjan to fall during the weekend. It didn't, so the market has bounced," a London-based broker said, explaining the higher prices earlier in the day.

"If the situation was to come back to normal we would see the market coming back down to around 1,850 pounds a tonne. Industry cover is at around six months which is fairly standard ... it's fairly comfortable."

BRAZIL CANE HARVEST DELAY

Raw sugar futures on ICE rose, tracking gains in other commodity markets, such as metals, and dealers saw key resistance at 28.20 cents a lb.

"It seems safer to sell a rally than buy a dip at present," said Thomas Kujawa of brokerage Sucden Financial.

ICE May raw sugar futures rose 0.44 cent or 1.6 percent to 27.88 cents a lb at 1605 GMT. The contract remains technically neutral as a consolidation between 26.37 cents to 28.20 cents per lb continues, Reuters market analyst Wang Tao said.

The contract has recently found good support around 26.50.

"It led to some technical buying here the last few days," Cruel said.

Liffe May white sugar was up $6.10 or 0.7 percent to $719.30 per tonne.

Dealers kept a close watch on the harvest outlook in top producer Brazil where rains have caused some harvest delays.

"The delay in the Brazilian harvest and a long tail (late harvesting) in Thailand are cancelling each other out in terms of their market impact," one sugar futures dealer said.

ICE arabica and robusta coffee fell on investor liquidation in modest volumes.

"We've seen a fairly big amount of speculator liquidation in New York and London," the London-based broker said.

The widening spread between London and New York prices could relate to Brazil's impending frost season which can see a risk premium become factored into arabica prices, although this is a seasonally lower time for arabica.

In robustas the May premium over July collapsed to around $30, after trading as wide as around $200 intraday last month, as selling pressure weighed.

"There's been both selling of May flat prices and the May/July switch," a London-based broker said.

(Graphic on coffee spreads:

http://link.reuters.com/qef88r

http://link.reuters.com/juf88r)

ICE May arabica coffee fell 0.25 cent to $2.5965 per lb at 1606 GMT GMT, while Liffe May coffee was down $89 or 3.7 percent at $2,332 per tonne, the lowest since March 15. (Additional reporting by Nigel Hunt and David Brough in London;editing by Sofina Mirza-Reid)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.