Cocoa rebounds from four-week lows, sugar dips
Category: Cocoa
(Reuters) – Cocoa futures fell to four-week lows on Wednesday on largely technically driven selling against the backdrop of an improving outlook for production in top grower Ivory Coast.
Dealers said that London and New York cocoa markets found some support at the lows and both could consolidate in the short-term before possibly resuming their declines.
“There is technical selling but also people mentioning the Ivorian crop is looking potentially better, with rains falling at the right times in the right places during the past few days,” one dealer said.
December London cocoa was up 6 pounds, or 0.3 percent, at 2,312 pounds a tonne by 1136 GMT after dipping to a low of 2,293 pounds, its weakest since Aug. 3.
Prices have fallen during the past few days after December set a contract high of 2,458 pounds on Aug. 19.
Dealers said that after a period of consolidation the market could test key support at last month’s low of 2,247 pounds.
“There is still scope for the market to fall another 50 pounds or so,” one dealer said.
Abundant rainfall last week in most of Ivory Coast’s principal cocoa regions could boost the October-to-March main crop, but more sunshine is needed to accelerate the growth of small pods, farmers said on Monday.
December New York cocoa was up $20, or 0.7 percent, at $2,910 a tonne after falling to a four-week low of $2,884.
Raw sugar futures were lower, with October off 0.15 cents, or 0.7 percent, at 20.37 cents a lb.
Dealers said the recent strength of the dollar, particularly against Brazil’s real, had helped to keep a lid on prices over the past few days.
A weaker real boosts prices in local currency terms in Brazil and can encourage producer selling.
Nearby supplies also remain plentiful, with October at a discount of about 50 points to March SB-1=R.
October white sugar was off $0.60, or 0.1 percent, at $536.90 a tonne.
Arabica coffee futures were little changed, with December off a marginal 0.03 percent at $1.46 per lb.
Dealers said the market was weighed by ample nearby supplies after a better than expected arabica crop in Brazil this year, though the potential for a smaller harvest in the world’s top grower next year has helped to underpin prices.
