Liffe March white sugar ended $9.40 higher at $727.80 per tonne on Monday. Concern about tight supplies reinforced by merchant Czarnikow's forecast for a third consecutive global deficit in 2010/11. Liffe March cocoa ended 8 pounds lower at 1,866 pounds a tonne.
Market continues to keep a close watch on the presidential run-off in top grower Ivory Coast with results awaited later on Monday. Violent protests if the outcome is disputed could disrupt shipments. Liffe January robusta coffee ended $37 lower at $1,779 per tonne. Market under pressure as the harvest in top robusta producer Vietnam gathers pace.
"The cocoa market tends to shrug off disruptions unless things get really serious. There is a sense that the cocoa will get out (to the international market)," said VM Group analyst Gary Mead.
The head of the UN mission to Ivory Coast said on Monday the presidential election the day before had been conducted in a democratic atmosphere, despite isolated violence and disruptions. A London-based trader said, "Buyers are cautious. People expect tension when it's a close election." Dealers said they expected the election to be a short-term issue for the market and that the focus would revert to supply and demand in the coming weeks.
"The consensus is that there's going to be a unified government. We've got a good crop, and consumption is not skyrocketing, so there's no need to panic for now," the trader said.
Sugar futures rose, supported by a monthly report from merchant Czarnikow predicting a global sugar deficit, with many producers expected to fail to reach production targets due to adverse weather. Czarnikow said it had changed its forecast for the 2010/2011 sugar market, predicting a third consecutive global deficit, with the shortfall at 2.8 million tonnes in the year.
"Clients of Czarnikow would have received this report a few days ago and it could well be helping the market today," one senior London sugar futures broker said. Analysts spoke of expectations of tight export availability from top producers Brazil and India and low global stock levels.
"Overall, a case for strong fundamentals continues to be made for sugar," said VM Group's Mead. Upside potential was limited by the strengthening dollar as investors looked past the Ireland bailout to debt problems in other peripheral eurozone economies. "The harvest is accelerating but we have not yet received reliable information on exact volumes and quality," said Stefan Uhlenbrock, a commodity analyst at Germany-based F.O. Licht. The stronger dollar limited the upside potential of arabica futures, which were underpinned by tight Colombian supplies.
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