Cocoa rebounds in London, sugar mixed

Cocoa futures in London rebounded on Tuesday, after earlier dipping to the lowest levels in more than two months, as a wave of fund selling finally abated. Sugar prices were mixed with the impact of lower Indian output partly offset by expectations of rising production in Brazil while coffee was marginally higher.
May cocoa in London ended 23 pounds higher at 1,715 pounds a tonne after earlier touching 1,656 pounds, its lowest level since mid-December. "It is just the inevitable bounce. It has come down in epic proportions in the last few days," one dealer said, adding that long liquidation by funds had fuelled the sharp decline. Prices on ICE also recouped early losses although the strength of the dollar against sterling helped to limit gains.
May cocoa on ICE settled $3 higher at $2,359 a tonne after earlier trading as low as $2,313. Prices had fallen about $600 after the May contract had traded as high as $2,917 just two weeks ago. Some dealers have cited improving crop prospects in top producer Ivory Coast and concern that demand would be hurt by the economic downturn as factors in the price falls.
"I don't think those reasons warrant New York coming off $600. Maybe the funds were just too long, it (the decline) has just snowballed," one dealer said. Arabica coffee prices also edged higher as the market looked to recover from the sharp losses of the last couple of weeks. May arabica coffee on ICE were 0.25 cent higher at $1.1340 per lb at 1748 GMT.
The contract traded as high as $1.2425 two weeks ago but has fallen with funds selling as concern deepens about the economic crisis. May robustas in London ended $1 higher at $1,580 a tonne. Dealers said a holiday in Brazil reduced origin sales. Sugar prices were mixed, with the raws market boosted by the prospect of imports by top consumer India following a sharp drop in domestic production.
India expects to produce 16.5 million tonnes of sugar in the current crop year, a steeper decline than trade forecasts, and may import up to 2 million tonnes of raws, the farm minister said on Tuesday. May raw sugar on ICE rose 0.08 cent to 13.07 cents a lb while May whites in London ended $3.50 lower at $389.00 a tonne. The drop in Indian production prospects has led some to raise forecasts for the global sugar deficit in 2008/09.