NEW YORK: Cocoa futures rose on Friday to their highest level in 32 months, buoyed by the potential for a deficit in the 2014-15 crop year, while arabica and robusta coffee saw their weakest monthly performances since September 2011.
Raw sugar prices on ICE Futures US fell, dragged by a weak physical market. Cocoa futures on both ICE and Liffe rose to their highest in around 33 months, after gaining for 10 of the past 11 sessions on chart-based buy signals and a possible 2014-15 deficit in the global market.
The surge lifted the markets to the most technically overbought levels since October.
"With cocoa, the risk-reward bias is to the upside," one analyst said, adding that industry buying is likely to limit the downside while there could be potential for significant gains if there are any problems with next season's crops.
While the market anticipates a possible deficit in 2014-15, the International Cocoa Organization cut its 2013-14 global cocoa deficit forecast.
July cocoa on ICE closed up $25, or 0.8 percent, at $3,071 a tonne after peaking at $3,082. September cocoa on Liffe rose 11 pounds, or 0.6 percent, to settle at 1,932 pounds a tonne, after tapping 1,934 pounds. The session highs for both were the highest since September 2011.
Coffee fell on fund short selling, dealers said, as crop uncertainty in top grower Brazil took it further below April's 26-month high at $2.19 per lb.
"I think everyone is still trying to get a handle on just how much coffee there is (in Brazil), and there are a lot of different opinions in the market," one analyst said.
In a report seen by Reuters on Friday, Mercon Group pegged Brazil's 2014-15 coffee output at 50.5 million 60-kg bags, one of the most bearish forecasts in two months since a drought gripped the world's biggest grower.
July arabica coffee on ICE settled 4.45 cents lower, or down 2.4 percent, at $1.7750 per lb, and was down 12.6 percent for the month - its biggest monthly tumble since September 2011.
July robusta coffee futures on Liffe ended down $12, or 0.6 percent, at $1,937 a tonne, and were down 10.7 percent in May in its weakest monthly performance since September 2011.
Raw sugar futures on ICE were weaker, with abundant nearby supplies putting the market on the defensive.
"The physical market is a serious drag on prices," Green Pool Commodities analyst Tom McNeill told the Reuters Global Softs Forum, adding that it was oversupplied with prompt sugar.
July raw sugar on ICE settled down 0.10 cent, or 0.6 percent, at 17.38 cents a lb, while August white sugar futures on Liffe dropped $2.10, or 0.4 percent, to end at $470.90 a tonne.
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