Liffe March cocoa ended 93 pounds lower at 1,899 pounds a tonne on Friday. Prices fell back with a rally linked to supply risk in Ivory Coast following a disputed election seen overdone with ports still open and the flow of cocoa picking up. Liffe March robusta coffee ended $4 higher at $1,908 per tonne. Good harvest progress in top robusta producer Vietnam helping to keep a lid on prices. Liffe March white sugar ended $4.70 lower at $722.50 per tonne.
Market weighed by a slightly stronger dollar but remains underpinned by a growing consensus that there is likely to be a small global deficit in 2010/11. Cocoa futures fell, as cocoa beans flowed from the world's top producer and violence failed to materialise despite the contested election result, with prices moving further away from Tuesday's four-month highs.
"We're seeing hedge selling and a bit of speculative selling. It looks like the buying earlier in the week had been overdone," said a London cocoa futures dealer. "The flows of cocoa are picking up," the dealer added, noting that Ivorian ports were open and there had been no reports of violence as the impasse dragged on. The African Union suspended Ivory Coast on Thursday until President Laurent Gbagbo hands over power to Alassane Ouattara, whom the AU and United Nations consider the winner of last month's election.
A cash shortage may soon add pressure on incumbent Ivory Coast President Laurent Gbagbo to cede power as businesses across the West African state withhold taxes needed to pay civil servants, soldiers and police. "We suspect buy stops lie above 30 cents and sell stops below 27.00," said Nick Penney, a broker with Sucden Financial. "Until values reach either of these points we suspect volume will continue to drift off as the holiday season approaches."
ABN Amro/VM Group on Friday forecast a global sugar deficit of 2.99 million tonnes for 2010/11 (October-September), compared with its previous forecast for a surplus of 1.2 million tonnes. Consultancy Kingsman SA on Friday revised its 2010/11 (April-March) global sugar balance to show a deficit to 370,000 tonnes after previously projecting a surplus of 3.52 million tonnes.
"The decision by India remains vague - there's no definitive policy at the moment," said James Kirkup, head of sugar brokerage at ABN Amro Markets (UK) Ltd Penney said, "Eyes are all on India while it ponders export policy, and we suspect that, other than macro factors, it is largely this that is the driver of the market at present." Top coffee grower Brazil will finally be able to deliver a fraction of its arabica beans against the world's benchmark future contract, ICE Futures US said on Thursday, in a decision that provoked rivals to call for shunning the contract for fear it would drag down prices.
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