NEW YORK/LONDON: Cocoa futures trading on Liffe and ICE extended their gains to four-month highs on Wednesday following weak European processing data that fell within trade expectations, while dealers awaited for North American numbers on Thursday.
Raw sugar prices on ICE Futures US slipped, as drier weather was expected to aid harvest of a forecast record crop in top grower Brazil, while arabica coffee futures edged lower in choppy dealings.
Europe's first-quarter cocoa grind, a traditional indicator of demand, fell 3.9 percent from the same period last year to 339,377 tonnes, the Brussels-based European Cocoa Association said early on Wednesday.
"It was in line with expectation and as a result there was no knee-jerk reaction from the market when we opened this morning," said Justin Grandison, head of cocoa brokerage at ABN Amro Markets.
Traders had forecast a drop of between 1 percent and 5 percent, partly due to continued poor processing margins.
Chart-based buy signals continued to lift the market after Liffe cocoa pushed above its 200-day moving average and neared the 50 percent Fibonacci retracement level, while harvest-hampering rain in No. 3 producer Indonesia provided support, dealers said.
Liffe July cocoa futures closed up 10 pounds, or 0.7 percent, at 1,543 pounds a tonne, after earlier rising to 1,556 pounds, the highest level basis second month since December and rising above the 200-day moving average at 1,536 pounds. July cocoa on ICE finished up a slight $1 at $2,317 a tonne, after earlier rising to $2,337, its highest level since December. The contract was near its 200-day moving average at $2,353.
It is the first notice day for the ICE May cocoa contract.
"(Indonesia) has received a lot of rain in their cocoa producing areas and that is probably going to delay their harvest four to six weeks, at least," said Sterling Smith, futures specialist at Citibank in Chicago.
"That is making the market a little tight."
Cocoa grindings reported in Malaysia, Asia's biggest grinder, fell 3.2 percent to 72,203 tonnes in the first quarter of 2013, year-over-year.
North America cocoa grind data will be released at 4 p.m. EDT (2000 GMT) Thursday, with traders and analysts estimating it will come in anywhere from 1 percent lower to 1 percent higher, versus the first quarter of 2012.
Cocoa processors have plants in different global regions, such as West Africa where the data is not publicly reported, giving them the ability to switch their capacity usage according to the most economical locations at any given time, dealers and analysts said.
"If we also take into account the strong cocoa product exports from Ivory Coast and the increase in grindings in Brazil we believe that the underlying picture for consumption, while certainly not strong, is much more in line with the 1.5 percent increase suggested by the Nielsen sales figures," said Jonathan Parkman, joint head of agriculture at brokerage Marex Spectron.
Parkman was referring to data published by research group Nielsen, which showed the global chocolate market grew 1.5 percent between September and February.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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