Cocoa futures on ICE broke through the $3,000 level for the first time in more than one year on Tuesday in largely technically-driven trading against the backdrop of a global deficit. London prices also advanced, setting a five-month peak. Sugar futures rose and were seen to be consolidating in a market supported by expected demand in top consumer India and tight global supplies, while coffee edged up.
The cocoa market deficit of 73,000 tonnes in 2008/09 also contributed to the bullish boost to the futures market, said Kona Haque, an analyst at Macquarie Bank. December Liffe cocoa ended 42 pounds higher at 1,914 pounds a tonne on Tuesday, having earlier hit a five-month peak of 1,918 pounds driven by strong gains on ICE and the weakness of sterling.
October Liffe white sugar ended $2.10 higher at $552.10 with the market still in a consolidation phase after rising to record highs earlier this month. November Liffe robusta coffee settled up $16 at $1,357 per tonne with prices stabilising after a recent decline.
"I think there is a feeling that the market's in deficit, it's been reduced a little bit compared to last quarter, but it's not significant, so clearly the supply side is not performing," Haque said. She said that people are beginning to look towards the 2009/10 crop.
"I don't yet see a lot of strong supply growth coming on stream, so that could potentially mean another poor supply," Haque said, adding that it was still early to forecast. During the next few months she is neutral to bullish on the market. However, a London-based trader said most of the news is bearish, citing sluggish demand. "I just don't see any reason to justify the price movement," the trader said. "I don't think we're seeing too much demand.
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