LONDON: Cocoa futures rose sharply to the highest level in more than 18 months on Wednesday while raw sugar extended its prolonged slide and set a fresh 2-1/2 year low.
COCOA
July New York cocoa was up $81, or 3.0 percent, at $2,785 a tonne at 1334 GMT after surging to a peak of $2,856, the highest since September 2016.
Dealers said the rise in prices gathered momentum after the market breached resistance at Tuesday’s high of $2,727 with stops triggered during a rapid advance to the new peak.
The rise was largely fuelled by technically-driven fund buying although stronger-than-anticipated first quarter European grind data was also seen as supportive.
“It’s better that expectations and certainly better than consensus,” said Jonathan Parkman, head of agriculture at Marex Spectron. “So that’s a positive thing.”
Parkman said processing was stronger than recent chocolate confectionery demand data released as part of Barry Callebaut’s results, although this could be a sign of higher consumption of high-cocoa premium chocolate.
“We have been having stronger grinds than we have had chocolate confectionery consumption,” Parkman said. “We are of the opinion that there is a greater percentage of cocoa consumption that is not captured in the traditional chocolate confectionery category, such as artisan chocolate.”
Traders will now focus on first-quarter grind data from North America on Thursday and Asia on Friday to see if it confirms the stronger-than-expected trend.
July London cocoa was up 48 pounds, or 2.6 percent, at 1,870 pounds a tonne.
SUGAR
May raw sugar was unchanged at 11.65 cents per lb after earlier slumping to a 2-1/2 year low of 11.60 cents.
Dealers said the market’s prolonged slide had been driven by excess supplies, noting the premium of white to raw sugar has risen during the last couple of months.
“The divergence between the raws and whites prices … is probably being driven by trade fears that ageing Thai raws will end up in the New York (raws) delivery,” Commonwealth Bank of Australia analyst Tobin Gorey said.
“Those raws, worst case, would require blending. And blending requires a handsome fee for the few people who can do it. This thinning field of buyers is one reason why prices are starting to fall quite easily,” Gorey said.
August white sugar rose $2.80, or 0.8 percent, to $338.60 per tonne.
COFFEE
July arabica coffee was up 0.25 cent, or 0.2 percent, at $1.1610 per lb.
July robusta coffee was up $15 at $1,769 a tonne.
Source: Brecorder
