Liffe cocoa down

Liffe December cocoa ended 2 pounds lower at 2,033 pounds ($3,172) a tonne on Monday. Improving West African crop prospects weigh on prices. Liffe November robusta coffee settled $2 higher at $1,770 per tonne. Market failed to track gains on arabica market.
Arabica coffee hit a 12-1/2 year high early on Monday as prices rose about 3 percent on fund buying, while cocoa was steady as an improving supply outlook weighed. Liffe October white sugar futures ended $1.30 higher at $551.20 per tonne. Market underpinned by downward revisions to Russian and South African production.
Improving crop prospects in West Africa, the world's largest cocoa producing region, weighed on cocoa prices as benchmark Liffe December cocoa fell to 2,000 pounds a tonne in early trading. "The fundamental backdrop is bearish, we're looking for supplies to improve in the coming crop," Standard Chartered's Ofon said. However, dealers warned that improving demand could cap further price falls, with second-quarter European and North American grindings showing double digit growth.
"The downside is going to be limited because we're seeing a recovery in demand in Europe," Ofon said. "Some funds are looking to take profits at slightly higher levels than now," one London-based dealer said. "Levels of opening stocks in exporting countries for crop year 2010/11 are likely to be relatively low and certainly well below the level of 20.9 million 60-kg bags in crop year 2009/10," the International Coffee Organisation (ICO) said in a report on Monday.
However, the outlook for Colombian production is improving, which should ease tight high-quality arabica supplies, as Colombia is the second-largest arabica producer. "The supply picture is improving, which is why I don't see arabica staying at the levels we are seeing now," Abah Ofon, analyst at Standard Chartered Bank said. A federal judge on Friday banned the planting of genetically modified sugar beets engineered by Monsanto Co in a ruling that marks a major setback for the biotech giant.
Dealers saw no immediate market impact from the report. "GM crops provide very impressive returns in terms of yield. If the political compass swings away from allowing GM crops, you would see a slower rate of increase of yield," Jake Weatherall, a soft commodities trader with Rabobank said.