US cocoa futures extended gains on Thursday, reaching their highest since mid-November on follow-through buying, while sugar and arabica coffee firmed after the US Federal Reserve committed to keep interest rates low. Stock markets and commodities climbed after the Fed's announcement on Wednesday, spurring selling in the US dollar that brought it to a five-week low against other major currencies.
March cocoa on ICE closed up $30, or 1.2 percent, at $2,452 a tonne, the highest settlement for the spot contract since November 14. "Cocoa continues to climb on technicals and follow-through buying as it crossed through our initial upside target," said Bill Raffety, senior analyst for futures brokerage Penson Futures, referring to chart-based buying after the March contract climbed above $2,400 this week.
The move higher began on Tuesday when ICE and Liffe cocoa futures jumped 7 percent intraday, fuelled by short-covering as the crop outlook in top grower Ivory Coast appeared to be dimming, dealers said. "There is anticipation that bean arrivals in Ivory Coast will be slow," said Keith Flury, a senior analyst with Rabobank, anticipating a global 2011/12 (October/September) cocoa deficit of 100,000 tonnes.
Demand for cocoa is widely expected to surpass supply in the current crop year, helping prices to recover some of the ground lost last year, a Reuters poll of 20 analysts and dealers showed. London March cocoa inched up 2 pounds to finish at 1,591 pounds per tonne. Raw sugar futures rose but came off highs as producer sales pared the market's gains, dealers said. "It's having some trouble keeping itself up," said Jack Scoville, senior analyst at The Price Group.
March raw sugar futures on ICE climbed 0.22 cent, or 0.9 percent, to finish at 24.73 cents a lb. The contract rose to 25.21 cents on Tuesday, the highest for the front month since mid-November. Extending New York sugar futures trading session by two hours from January 30 will offer Asian consumers a chance to hedge on the exchange which sets the tone for global prices, but liquidity may take some time to pick up.
London March white sugar futures closed up $2.90 at $648.40 per tonne. Arabica coffee prices on ICE rose with March settling up 2.50 cents, or 1.2 percent, at $2.1970 per lb, suupported by the weaker dollar March robusta coffee on Liffe fell $17, or 0.9 percent, to close at $1,872 a tonne.
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