Cocoa slips, sugar up

Cocoa futures trickled lower on Wednesday following news that exporters had moved closer to an accord with authorities in top grower Ivory Coast on a recently launched forward-selling programme. Coffee traded mixed and sugar crawled higher, with the softs complex seemingly meandering in current ranges.
Leading export companies and authorities in Ivory Coast have made progress toward solving a dispute threatening to derail the country's planned reform of the sector, officials from both sides said after talks that ended on Tuesday. New York's May cocoa lost $13 to finish at $2,278 a tonne. The contract has traded in a range of around $2,250 to $2,500 for the last four weeks.
London's May cocoa on Liffe shed 2 pounds to settle at 1,486 pounds a tonne. New York cocoa is still likely to rebound to a range of $2,369-$2,399 per tonne, according to Reuters analyst Wang Tao. "We backed off a bit. Contributory was the idea that maybe things aren't as divided (as previously believed) with regard to the auction system," a London cocoa dealer said.
Ivory Coast launched auctions for forward sales at the end of January. The market has been weighed by the prospect that any purchases made at the auctions would be hedged on the futures market. Slow selling from No 2 cocoa grower Ghana added some pressure to the futures, a US dealer said. Sugar futures climbed, with raws again unable to surmount a topside target in the March contract above 25 cents a lb.
March raw sugar futures on ICE added 0.08 cent to end at 24.48 cents a lb. London March white sugar futures rose 50 cents to close at $647 per tonne. "There are stories about Indian exports and Chinese stockpiling and little that seems to inspire a trend reversal (from sideways)," Thomas Kujawa of brokers Sucden Financial said in a market note. "Overall, we feel that should the stops around 25 cents be elected it's a sell opportunity."
China will stockpile 1 million tonnes of white sugar in state reserves, buying from the domestic market to stabilize prices of the sweetener and protect farmer interests, the country's top planning body said. Nick Gentile, chief trading official at commodity fund Atlantic Capital Advisors, said the news of Chinese stockpiling was a factor in the market's move.
India has decided to allow unrestricted exports of 1 million tonnes of sugar, a government source said on Tuesday, in line with industry expectations in the world's second-biggest producer of the sweetener after Brazil. Coffee traded mixed. Arabica futures underwent heavy position rolling out of the March contract, with the March/May spread narrowing on short-covering. Arabica futures on ICE declined, with March off 0.90 cent to finish at $2.2005 per lb. May robusta coffee on Liffe rose $14 to end at $1,890 a tonne.
"The March/May spread in coffee has been tightening up because there have been some specs short-covering," said a veteran softs dealer in New York. Gentile said arabicas needed a close over $2.22 to $2.24 to generate follow-through action. Open interest in arabica futures rose 1,776 lots to 136,418 lots on February 7, the highest since February 9, 2011, ICE data showed. Also in the previous session, its volume soared to 42,389 lots, the highest since August 2011.
The International Coffee Organisation on Wednesday cut its forecast for the global coffee crop in 2011/12 to 130.9 million 60-kg bags, from a previous estimate of 132.4 million. The ICO said the move partly reflected a reduced forecast for the crop in Ethiopia. Global production should rise in 2012/13, an on-year in Brazil's biennial crop cycle. "Although there is likely to be a significant increase in Brazilian production during the upcoming crop year, this will not necessarily lead to a serious imbalance in the market since demand remains strong," the ICO said.