(Reuters) – Cocoa futures weakened on Tuesday, falling below two-month highs as much-needed rain fell in top grower Ivory Coast, though many traders still expected a significant reduction in both the quality and quantity of this year’s mid-crop.
Raw sugar turned higher and neared the highest for 2016 as the Brazilian currency firmed, while arabica coffee inched up to a one-month peak.
New York cocoa was lower with May closing down $40, or 1.3 percent, at $2,970 per tonne, below Friday’s two-month high at $3,018. London May cocoa shed 20 pounds, or 0.9 percent, to end at 2,192 pounds a tonne, falling below Monday’s two-month top at 2,227 pounds.
“Thanks to the recent rainfall, the prospects for the upcoming mid-crop of cocoa in Ivory Coast – the leading producer country – have improved,” Commerzbank said in a market note.
“However, it remains to be seen whether the rainfall arrived in time and whether it was enough to prevent crop shortfalls.”
Rains have raised growers’ hopes in most of Ivory Coast’s main cocoa regions, after last week’s sharp drop in exports due to a lack of rain and strong winds.
“The quality of the crop may be marred, which would result in tighter supplies of exportable grade cocoa, but may not slash the absolute production totals,” said Judith Ganes-Chase, president of New York-based J. Ganes Consulting, in a monthly report on Tuesday.
“What strikes me as the most bullish aspect is the continued erosion in cocoa stocks relative to demand.”
Raw sugar turned higher, with May settling up 0.2 cent, or 1.4 percent, at 14.86 cents per lb.
Dealers said they viewed the firm session as a sign the market could resume its recent advance after a modest setback this week. The contract had hit a peak of 14.93 cents on Friday, its highest level this calendar year.
That was fueled partly by a strengthening in Brazil’s real currency, which could help slow the pace of selling in the world’s top producer, as well as global deficit forecasts.
May white sugar settled up $4.50, or 1.1 percent, at $426.10 per tonne.
Arabica coffee inched up with traders seeing the firm Brazilian real as a source of upward momentum. May settled up 0.8 cent, or 0.76 percent, at $1.217 per lb, facing resistance at the 100-day moving average of $1.221.
May robusta coffee settled up $14, or 1 percent, at $1,408 per tonne.
