Liffe March white sugar ended $14.40 lower at $773.00 per tonne on Friday. Market weighed partly by a slowdown in physical offtake while dealers continue to wait for clarity on the outlook for Indian exports. Liffe May cocoa closes 40 pounds higher at 2,007 pounds a tonne. Market regaining ground after recent weakness with industry buying helping to spark the turnaround.
Liffe March robusta coffee finished off $13 at $2,124 a tonne. Market seen overbought after run-up earlier in the week to 2-1/4 year peak but prices remain underpinned by the large discount of robustas to arabicas. Weakness in the cash market driven by a lack of offtake had weighed on prices earlier in the day. Dealers continued to keep a close watch on developments in India, the world's number 2 sugar producer after Brazil, where there are concerns that anticipated exports could be delayed due to worries about food inflation.
"With China worried about inflation as well as India now, it seems sugar export policymakers in India have an even more difficult decision," said Thomas Kujawa of broker Sucden Financial. "It seems Indian officials will have to be very cautious." A European broker said: "It seems unlikely that the Indian government will authorise any further exports until the harvest has progressed enough that all reasonable doubt about the outcome has been removed."
Dealers said the market shrugged off European fourth-quarter 2010 cocoa grind data showing a fall of 2.4 percent on the year to 342,713 tonnes. They had anticipated that the grind would be flat to slightly lower. "The European numbers were in line and the market has not reacted to them," a London cocoa futures dealer said. Dealers noted the recent run-up in prices has deterred demand in the physical market.
"Physical business is slow because no one wants to pay these high prices," said Ray Keane, a dealer with importers Balzak Bros and Co in South Carolina. "There is still some index fund liquidation to come by all accounts and this could dent New York values further," said one London coffee broker.
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