London cocoa futures surged by 66 percent in 2008, driven by tight global supplies, making them an outstanding performer among the major financial markets. Robusta coffee futures prices shed 19 percent in 2008, due to ample availability, and white sugar ended the year just 0.95 percent higher than the last trading day of 2007 despite huge volatility in the 12 months, triggered by investment funds.
After an abbreviated London session, London benchmark second-month cocoa futures closed at 1,765 pounds per tonne on Wednesday, up 66 percent from a year ago. The settlement was up 5 pounds from Tuesday in thin volume of 408 lots. Dealers were divided over whether cocoa would head higher, with some saying the commodity was vulnerable to sell-offs by investors to lock in profits.
"There are quite a few people who say that cocoa is very toppy at the moment," one dealer said. ICE March cocoa was up $32 or 1.3 percent to $2,561 per tonne at 1312 GMT. Dealers digested fresh data underscoring slow arrivals of cocoa beans to ports in top producer Ivory Coast. The loss in London robusta coffee futures prices in 2008 was driven by ample supplies against a backdrop of steady demand, dealers said.
"There seems to be a reasonable supply of robustas," one London dealer said. "Downward pressure (in prices) may continue in the new year." Traders said activity on Wednesday had been dominated by Against Actuals (AAs, a form of hedging). London March robustas ended 2008 at $1,546 per tonne, down $22 or 1.4 percent from Tuesday, in slack turnover of 876 lots.
ICE March arabicas were down 0.1 cent to $1.0745 per lb. In sugar, futures prices appeared to be more in tune with market fundamentals after a volatile year driven by funds that piled into the sweetener early in 2008 and later sold off after a collapse in oil prices on a grim global economic outlook.
"The funds, which were the instigators of the price rally, headed for the exits," said David Sadler, a senior sugar futures trader, summing up the volatile trading conditions in 2008. Dealers said they expected funds to reduce allocations to sugar by some 40,000-45,000 lots in January 2009. Sugar has proven resilient so far to the gloomy outlook for the global economy, reflecting stable demand for the sweetener as a staple in diets.
London front-month white sugar, which ended 2007 at $315.00 per tonne, added just $3.00 by the end of 2008, settling at $318.00 per tonne. The settlement was $2.0 or 0.6 percent above Tuesday's close in light volume of 564 lots. ICE March raw sugar was up 0.10 cent or 0.9 percent from Tuesday to stand at 11.39 cents per lb at 1255 GMT.
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