London cocoa adds to gains to hit two-month high

Short covering by large investors on Wednesday extended gains on London's cocoa market, taking it to the highest level in more than two months, traders said. Liffe's second-month September contract made a session high of 897 pounds a tonne - the highest since 898 on April 8. It closed 3.1 percent stronger at 890 pounds in volume of 9,687 lots. The day's low was 866.
Traders said the rally was mainly technically driven although opinion is divided on whether fundamentals have also played a part or not.
"There's no fundamental reason for the terminal market, it's just pre-notice day action and short covering because of technical factors," one trader said.
Cocoa players also noted that spreads between contracts had firmed.
July/September is trading with an eight pound discount for July versus September, down from 14 pounds a month ago.
Total turnover stood at 21,304 lots with front-month July drawing trade of 6,807 lots. The spot month gained 26 pounds to 882 pounds..
COFFEE NARROWLY UP: London robusta coffee finished narrowly higher but well off the day's peak on Wednesday after a wobbly New York market destabilised Liffe prices, dealers said.
Liffe's benchmark September futures contract closed up $5 at $1,205 a tonne after rising as high as $1,248. The day's low was $1,184 and volume was 11,262 lots.
"Gains of as much as $86 at one point were probably too much, we were expecting a rally but the market is full of extremes at the moment," a dealer said.
"We were never going to get support from New York. Jobbers were long and leap-froggeed each other to get out in last hour."
New York's arabica July contract was 20 cents down at $1.11095 by London's close.
Spread activity swelled overall volume to 21,559 lots with funds seen rolling out of spot month July into September.
SUGAR DOWN: Liffe white sugar futures closed lower in thin volume on Wednesday as trade participants focused on the front-month spread, dealers said.
Spot August lost $1.80 to $253 a tonne. Volume was 3,028 lots thanks to trade Against Actuals and spread activity. "It's very thin and we're just tracking New York, there's a bit of profit-taking," a dealer said.
He said trade players were waiting for funds to cover their short positions. Second-month October lost $2.90 to $245.30.