ICE cocoa rallies

Cocoa futures on ICE rallied to one-month highs on Friday on technical buying after prices pierced $2,500 per tonne and as speculators bet on a potential global supply shortfall. Meanwhile raw sugar and arabica coffee remained under heavy pressure on speculative selling amid plentiful supplies.
"There's technically oriented buying (in cocoa) and the dollar's getting hammered," said Jack Scoville, an analyst with The Price Group in Chicago. Benchmark ICE March cocoa futures rose $40, or 1.61 percent, to settle at $2,516 per tonne, just $4 below its intraday high and its highest level for the benchmark second month since October 23. Price moves in New York were exaggerated by below-average trading volumes after markets reopened following the US Thanksgiving holiday on Thursday.
Dealers remained on weather watch in West Africa where drier weather could hurt main crop harvests in Ivory Coast and Ghana and lead to a larger-than-expected deficit in the current season, dealers said. After regular rainfall and abundant sunshine in October, Ivory Coast, the world's largest producer, is entering its dry season, which can affect the quality and size of the beans.
Arrivals at the country's two ports between November 12 and November 18 were already behind year-ago levels. "We expect less-than-favourable weather causing production setbacks in key producers, coupled with strong grindings in key producers such as Cameroon and Malaysia, to widen the deficit," Barclays Capital's analysts said in a weekly note.
The bank has widened its global deficit estimate to 108,000 tonnes in the 2012-2013 season from a previous forecast of 98,000 tonnes. Others, including Cargill, one of the world's largest cocoa merchants and bean processors with facilities in Ivory Coast, expect a balanced market with abundant crops and sluggish demand though. London March cocoa rose 24 pounds, or 1.53 percent, to settle at 1,597 pounds a tonne.
Raw sugar futures on ICE hit one-week lows as the market moved down after failing to break a band of resistance around 20 cents a lb on the key March contract earlier in the week. March raw sugar futures fell 0.5 cent or 2.5 percent to 19.14 cents a lb, just off a low of 19.11. For the holiday-shortened week, sweetener prices were unchanged though, handing back all the gains made during Monday's short-covering rally as concerns about waning demand from China, the world's largest importer.
"We expect the market to remain under pressure amid ample supply and weaker import demand from key importing countries," said Barclays' analysts said in a weekly research note. "We anticipate further weakness in sugar import demand ahead, with China's domestic 2012-13 crop looking good due to favourable weather and increased plantings."
Dealers said there is still scope for rallies across the softs with funds still heavily short, although producer selling could help to keep a lid on the market. The US Commodity Futures Trading Commission has delayed the release of its Commitment of Traders report until Monday due to the Thanksgiving holiday.
March white sugar on Liffe fell $11.80 or 2.25 percent to settle at $510.60 per tonne. Arabica coffee futures on ICE were teetering close to 1-1/2-year lows on Friday weighed down by plentiful supplies following a large Brazilian crop and by an improving outlook for next year's harvest in the world's top coffee producer. March arabica coffee futures were off 2.6 cent, or 1.73 percent, at $1.508 per lb. The contract sank to $1.4945 last week, the lowest level for the second month since June 2010.
Arabica has fallen every week bar one when it was unchanged for the past two months. The spread between December and March remained at 18-year highs above 8 cents per lb, as longs continued to offload positions ahead of the expiry of the December contract. Robusta coffee futures also fell with the harvest in top robusta producer Vietnam in full flow. January robustas were off $14, or 0.75 percent, at $1,859 a tonne.