Cocoa futures in London soared to a fresh 23-year high on Tuesday, boosted by a sharp decline in the value of sterling and continued concern about slow port arrivals in top producer Ivory Coast. Raw sugar futures also rose on fund and investor buying of the March contract, while coffee remained slightly down.
"Weak sterling is having a positive impact (on London cocoa) and I think the market is still being helped by slow arrivals in Cote d'Ivoire (Ivory Coast). For now the overriding concern is supply," said Standard Chartered softs analyst Abah Ofon. May cocoa in London was 80 pounds higher at 1,834 pounds a tonne at 1549 GMT, after touching 1,849 pounds, the highest level for the benchmark second month since October 1985.
March cocoa on ICE was off $14 at $2,449 a tonne but stood well above the day's low of $2,340. Dealers said supply concerns linked to the slow pace of port arrivals in Ivory Coast were outweighing the bearish impact of a possible slowdown in demand caused by economic downturn. Switzerland's Lindt & Spruengli missed full-year sales expectations and its own sales growth target as global economic gloom dented consumers' spending on chocolate.
"There was a rapid and worse-than-expected tail-off in retail sales in the US and UK around the Christmas period," said analyst Jon Cox of Kepler Capital Markets. Raw sugar prices on ICE rose on Tuesday boosted by fund and investor buying on March with the rise gathering momentum as prices broke above the 100-day moving average of 12.25 cents.
March raws stood 0.30 cent higher at 12.56 cents a lb. Dealers noted selling by Thai producers around the highs. March whites in London were $3.50 higher at $348.50 a tonne. Reports that key producer India may see an increase in production in 2009/10 raised some concerns about how long the tighter supply outlook will be maintained.
Higher sugar cane prices are prompting Indian farmers to increase acreage, which may lead to rise of up to 30 percent in cane availability in 2009/10 and check soaring sugar prices, industry players said. Coffee prices were slightly lower but remained well within the market's recent range. March arabica coffee futures on ICE fell 0.30 cent to $1.1550 per lb while March robustas in London eased $2 to $1,655 a tonne.
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