March cocoa in London surged to a 24-1/2 year high of 2,207 pounds a tonne on unexpectedly positive third-quarter Europe grind data on Friday, but then fell to settle up 3 pounds at 2,146 pounds after the report was withdrawn due to an error. December white sugar ended $16.3 lower at $559.5 per tonne. Lack of physical demand is weighing on the market.
November robusta coffee ends $20 lower at $1,461 per tonne. Origin selling expected to kick in soon as new crop arrives in top robusta producer Vietnam. The European Cocoa Association stunned the market by reporting a 16.5 percent rise in the third-quarter European cocoa grind, but later withdrew the data, saying there appeared to be a statistical error in grindings reported by one of the contributors.
Many traders had expected the report to show a decline. A revised report will be issued on October 14. "If you were short of the market coming into those numbers thinking it (the grind) is going to be down and it comes in up 16 percent you have to react. You can't sit on your hands. I think there was a bit of panic buying," one dealer said.
Kona Haque, commodity strategist with Macquarie Bank, said the demand outlook for cocoa was improving. "It is very clear that grindings are starting to recover, the onus is definitely on the supply side to be able to deliver and it just doesn't look likely even with pretty good weather indications so far," Haque said.
"I'm actually above consensus on the Ivory Coast (production) and below consensus on grindings and I'm still getting a deficit (for 2009/10). We are in a structural deficit for the market." Concerns over Ivory Coast output and signs of reviving demand as the world emerges from economic downturn have helped fuel the run up in prices. Sugar consolidated below its recent peaks, with harvests under way in key producers such as India and Russia making fresh supply available and capping upside potential.
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