Cocoa and sugar futures rallied on investor buying on Wednesday with both markets underpinned by supply concerns while coffee also edged higher. Dealers said cocoa derived support from pod counter estimates for the mid-crop in top producer Ivory Coast which were smaller than many had anticipated.
Ivory Coasts April-September cocoa mid crop harvest may be as low as 200,000 tonnes, pod counters estimated on Wednesday, well below last years 315,000 tonne harvest and much smaller than farmers forecasts. "Were seeing fund and spec short covering," one dealer said in the afternoon, adding that soft commodities markets gained support from the weak dollar.
May cocoa on ICE gained ground late in the session and was up $79 at $2,475 a tonne at 1738 GMT while May cocoa in London settled up 47 pounds to 1,855 pounds a tonne. Dealers said the weakness of sterling helped to boost cocoa futures in London. Sugar prices also rose as the market continued to closely monitor Indian sugar policy following a sharp drop in production this year.
India could import up to 3.5 million tonnes of sugar in 2009 if the worlds top sugar consumer has a shortfall this year, David Sadler, manager of Sucden Financials Sugar Department, said on Wednesday. May raws on ICE rose 0.12 cent to 13.23 cent a lb while May whites in London closed up $4.60 to the session peak of $401.90 per tonne in thin conditions.
"Moves to 13.50 to 14.00 cents a lb are an opportunity for producers to sell," one dealer said. Coffee futures were higher with the arabica market much tighter than robustas following a drop in Colombian production. "New York has a fundamental story but Im still a bit negative about London (robustas). A sustained rally would come into quite a lot of origin selling in London," one dealer said.
Colombias coffee output for the first six months of the year is initially forecast at 4.5 million 60-kg sacks compared with around 6 million a year ago as rains and a rejuvenation programme cut into output, the National Federation of Coffee Growers said on Tuesday. May arabicas on ICE rose 1.85 cent to $1.1310 per lb while May robustas in London finished up $15 at $1,537 a tonne.
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