Liffe December cocoa ends 15 pounds higher at 2,015 pounds a tonne on Monday. Dealers noted front-month premium had begun to widen again after narrowing sharply during the last month, reviving concerns about potential tightness in available supplies to tender against September.
Liffe October white sugar futures ends $2.40 higher at $577.80 per tonne. Market underpinned by continued port delays in top producer Brazil and strong nearby demand. Liffe November robusta coffee settles $14 lower at $1,777 per tonne, tracking setback in ICE arabicas which had earlier risen to the highest level in nearly 13 years
Earlier in a day, arabica coffee eased from a near 13-year high after a rally partly driven by tight supply of high-quality beans, and bullish technical charts indicated potential for further gains, while sugar was steady.
Cocoa reversed losses made earlier in the session to trade higher on light buying volumes, dealers said. New York coffee is expected to rise further to $1.9180 a lb, as an upward wave "C" is progressing, Reuters analyst Wang Tao said.
The rally is also being supported by tight supplies of high quality arabica beans, causing roasters to draw down exchange stocks. "In the nine months to July, visible stocks at coffee importing countries fell sharply as roasters scrambled to obtain decent quality coffee," Kona Haque, analyst at Macquarie Bank, said.
"The sharpest fall in stocks has been in mild arabicas following continued underproduction from Colombia." Central American and Colombian coffee crops were disappointing last year and are expected to recover in 2010/11.
"We are still convinced that this rally is not lasting and the situation will ease in the fourth quarter," Commerzbank said. Sugar futures were steady, underpinned by continued port delays in the world's number one producer Brazil and strong nearby demand. Dealers said a strong performance this session, with raw sugar prices staying around the key 20 cent a lb level, could indicate further upside.
"The technicians seem to be suggesting a close above 20c tonight or in the next couple of sessions will result in a test of the resistance at 21c," Thomas Kujawa at Sucden Financial said. Although Brazil's port congestion eased last week, with the line up of ships awaiting loading falling, dealers said it would still take some time to clear. On the demand side, Iraq has issued a tender for a minimum of 200,000 tonnes of white sugar, according to the website of the Iraqi Foodstuffs Company.
Liffe's September contract premium over December widened to 76 pounds from 45 pounds at Friday's opening, fuelling concern of a supply crunch following the largest delivery in 14 years against the July contract. "The widening premium may be a symptom of volume being light," a London-based broker said. In recent weeks funds holding long positions in cocoa have sold heavily, causing London prices to fall about 15 percent.
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