Soft commodity markets were consolidating on Tuesday after steep losses from wholesale investment fund liquidation in the previous session, analysts said. "Today is a consolidation day," Larry Young, a senior analyst for brokerage Infinity Futures in Chicago, said when asked about the general tone in world soft commodity markets.
Cocoa futures staged a modest rebound, riding technical purchases to finish higher, analysts said. The benchmark New York September cocoa contract climbed $42 to settle at $2,922 a tonne. On Monday, the contract sank $256 or by 8.2 percent to finish at $2,880.
In London, the September cocoa contract cocoa rose 22 pounds to end at 1,564 pounds a tonne. Infinity Futures' Young feels that pushing the contract over the Monday top of $3,079 may lead to further gains in bean values.
Hans Kashyap, president of Analytics Research Corp in California, said there is no indication whether the Tuesday low in September cocoa of $2,857 would hold up. "If we see new lows, we pretty much see $2,800 as the next target," said Kashyap, adding that a fall to $2,800 is likely before the market turns upward.
"Any rallies will not see new highs. We'll need a sideways pattern to get the market in gear for the next thrust up that could take us to $3,290," Kashyap said. Other analysts pointed to lingering concerns over possible production shortfalls in the top three growers of Ivory Coast, Ghana and Indonesia.
Sugar futures embarked on late investment short-covering to wind up higher on the day. The key New York October raw sugar contract rose 0.23 cent to end at 13.75 cents per lb. The London August white sugar contract rose $0.80 to close Tuesday at $384 per tonne.
The steadiness in sugar may have been bolstered by news that Indian farmers are likely to plant less sugarcane in 2008 after a record sugar output in the crop year to September 2007, a top farm official said on Tuesday, raising prospects of higher prices of the commodity.
Coffee prices, on the other hand, lost ground for the third day running, as London robusta coffee futures fell on follow-through profit-taking from Monday. The London September robusta contract fell $14 to finish at $2,302 a tonne. The ICE September arabica contract arabicas lost 0.90 cent to conclude at $1.424 per lb.
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