London cocoa sets 5-1/2-year high

London cocoa futures climbed to a 5-1/2-year high on Thursday while coffee and sugar prices also advanced on a new wave of speculative and fund buying sparked partly by dollar weakness, dealers said.
"All commodities are up, not just coffee but cocoa and sugar also. Basically the market is tracking dollar weakness and the CRB index. It has nothing to do with fundamentals," one soft commodity trader said.
July cocoa ended up 55 pounds at 1,517 pounds a tonne after touching 1,522 pounds, the highest level for the second position since October 2002. Dollar-denominated US cocoa futures contract rose even more steeply, soaring to a 28-year high.
Dealers said industry buying sparked early strength in London and the rise gathered momentum as stops were triggered as support at the key 1,500 pound level was breached.
The Reuters-Jefferies CRB index climbed to a record high on Thursday. A strike over pay by dock workers at ports in Ivory Coast went into its fourth day on Thursday, halting the loading of export shipments from the world's top cocoa producer, shippers and exporters said. Robusta coffee futures also rose strongly with the market advancing back towards a 12-1/2 year high set last week after absorbing a bout of profit-taking.
"The upside is the least line of resistance. Managed money is still very influential. The strength of the funds attracts other specs," one dealer said. May coffee ended up $106 at $2,758 a tonne. The contract peaked at $2,815 a week ago before profit-taking drove prices back down to a low of $2,429.
Dealers noted that May's premium to July rose to about $16, from $4 on Wednesday and a discount of $30 less than two weeks ago, boosted by talk of possible supply tightness.
Prices for ICE arabica coffee futures also rose strongly. White sugar futures also ended sharply up, boosted by a rise in oil prices to a fresh record high and a weak dollar. Prices for sugar, which can be used to make biofuel ethanol, sometimes closely track those of crude oil although the relationship often breaks down. May whites ended $5.90 higher at $357.80 a tonne.
The front month remains, however, well below a 15-month high of $400.00 set on March 4. Dealers said the sugar market was struggling to overcome bearish fundamentals, with a large global supply surplus anticipated in 2007/08.