September cocoa settled 53 pounds higher at 1,662 pounds a tonne on Wednesday, having touched a three-week high of 1,664 pounds a tonne earlier, on a weak pound. Traders were also digesting a Reuters interview with Olam, a leading supplier of cocoa beans, predicting falls in European grind due out on Thursday morning.
August white sugar closed 90 cents higher at $437.40, with gains limited by the weaker crude oil price. While September robusta coffee settled $9 lower at $1,343 per tonne in modest volumes, with traders noting the commodity was rangebound, and adding that prices were looking attractive to industry buyers.
The soft pound, which hit a one-month low against the dollar, triggered investor buying of London cocoa futures as the market digested a Reuters interview with Gerry Manley, head of Olam Cocoa, who predicted an 8-10 percent drop in European Q2 cocoa grind. The grind is a measure of demand. The official European Q2 grind data is due to be released on Thursday morning.
Manley also told Reuters television global cocoa grind was likely to fall 6 percent, hit by the recession. One London-based cocoa trader said he agreed with Olam's European grind forecast. "I think it will be weak," the London-based trader said, adding he saw it down 10 percent. Another London-based trader said Olam's Q2 European grind forecast was in line with market expectations.
"I think that's just what everyone's expecting, but these things always seem to provide a little shock, so it will be interesting to see. "If it comes in around 11-12 percent there will probably be reaction to the downside and if it comes in at 6 percent (down) there will be reaction to the upside."
Sugar futures gained in Europe after the dollar slipped against a basket of currencies, with concerns over top consumer India's sugar requirements also underpinning the sweetener. Nick Hungate, a soft commodities trader at Rabobank, said that while bearish sentiment was keeping most commodities on the back foot, sugar was finding some support from robust fundamentals.
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