Cocoa futures jumped on Wednesday, resuming a sharp uptrend and peaking at a 3-1/2-year high, on fears of Ebola spreading in West Africa, potentially hindering cocoa exports from the top growing region. Arabica coffee on ICE Futures US surged nearly 5 percent on technical buy signals and concerns about near-term dry weather forecasts in top grower Brazil. The benchmark raw sugar contract turned higher after the latest update on Brazil's harvest showed a slowdown in crushing.
Front-month ICE December cocoa futures closed up $74, or 2.2 percent, at $3,371 a tonne, fuelled by fears of an Ebola outbreak in Ivory Coast. The session high of $3,379 was the highest since May 2011. The contract had eased on Tuesday after seven sessions of gains.
"If you take Ebola out of the equation I think the market is priced higher than it needs to be on pure fundamental grounds, but with Ebola in the background I think it's very hard to make a well-reasoned assessment as to what the fair price of cocoa should be at the moment," said Jonathan Parkman, joint head of agriculture at broker Marex Spectron.
Parkman noted that the coming weeks are a sensitive time for the market, ahead of shipments of large volumes of new crop. March cocoa in London settled up 45 pounds, or 2.2 percent, at 2,112 pounds a tonne, after reaching 2,114 pounds, the highest for the second position since March 2011. In coffee, December arabica futures on ICE jumped 8.20 cents, or 4.5 percent, to finish at $1.891 per lb, after soaring 4.9 percent to $1.898. "It's technically oriented more than anything else," said Rodrigo Costa, director of coffee for Newedge USA in New York, adding that a lack of selling interest in top grower Brazil enabled prices to jump easily. A combination of short-covering and new buying lifted prices above the prior session's peak after breaching the 100-day moving average at $1.8510.
November robusta coffee futures on Liffe closed up $36, or 1.9 percent, at $1,965 a tonne. ICE October raw sugar futures closed up 0.47 cent, or 3.3 percent, at 14.62 cents a lb. The October/March spread narrowed to a 1.28-cent discount, from 1.54 cents on Tuesday ahead of the October contract's expiry September 30. The most-active March contract turned higher and closed up 0.17 cent, or 1.1 percent, at 15.90 cents per lb. Liffe December white sugar ended up $3.40, or 0.8 percent, at $415.50 a tonne.
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