London cocoa futures settled off a four-month peak on fund buying on Tuesday, although a strike in top grower Ivory Coast appeared to have no impact, while coffee focused on rollover business underpinned by trade buying.
London white sugar futures finished firmer after another session of options-related trade. March cocoa closed up 20 pounds or 2 percent to 1,017 pounds in brisk volume of 21,112 lots, after peaking at 1,020 pounds, its highest level since early August.
"It is probably some fund short covering," one London cocoa futures dealer said. "I don't think it is anything to do with the strike. Cocoa will still flow during the strike. It just won't get shipped."
Referring to the heavy volumes, the trader added: "If you put those size of orders in the market it is definitely going to go on the upside." Another dealer referred to a mixture of technically driven factors pushing the market higher, including fund buying, arbitrage and short covering. Dealers downplayed the market impact of the strike in Ivory Coast. Staff at Ivory Coast's Coffee and Cocoa Bourse (BCC), which controls exports of cocoa in the world's top grower went on strike on Tuesday over pay and conditions.
London robusta coffee futures finished little changed after a session featuring active position rolling, underpinned by a pick-up in trade and roaster buying after Monday's sharp decline in prices.
January closed down $14 at $1,739 per tonne. The contract fell to a 3-month low of $1,711 a tonne on Monday weakened by system fund selling. Concern about a possible supply squeeze on January appeared to have diminished with the front month trading at a discount of $25 to March compared with a premium of up to $70 at one point last month. "It is not looking like squeeze material," one dealer said, saying Vietnam's harvesting was making better-than-expected progress after initial delays caused by rainfall.
Robusta coffee prices eased slightly in Vietnam thanks to more fresh bean supplies as farmers were speeding the harvest thanks to sunny days in the country's key growing region, traders said.
London white sugar futures edged higher on options-related buying, but the market remained range-bound with the prospect of sales by the world's top producers Indian and Brazil limiting scope for any significant rally.
March finished up $1.0 at $288.0 per tonne in moderate volume of 2,834 lots. French white sugar production in the 2007/08 season should be around 4.1 million tonnes, based on a sugar yield of 12.6 tonnes per hectare, the country's beet growers union CGB said on Tuesday.
Sugar farmers and mill workers across eastern and central Cuba expect a significant increase in raw sugar production for the first time in years, despite delays caused by recent flooding that damaged infrastructure.
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