Cocoa climbs

Cocoa futures on ICE posted the largest daily gain in a month near midday, after sinking to a nine-month low early on Thursday, supported by a weaker dollar and by ideas recent declines were seen as overdone amid expectations of an impending supply deficit. ICE raw sugar futures rose on expectations that an increase in ethanol production in top producer Brazil would deplete a global sugar surplus. ICE arabica coffee prices also gained.
May cocoa on ICE Futures US gained $20, or 0.98 percent, to settle at $2,062 per tonne, after earlier falling to $2,034, the lowest for the second-month contract since June 2012. It was the second-month contract's largest daily gain since February 5. "We're at a spot where the downside is running out of steam, and some of these lower levels are starting to spark demand," said Jack Scoville of the Price Futures Group in Chicago.
Expectations for a small global cocoa deficit raised talk that the recent move lower was overdone. Last month the International Cocoa Organisation (ICCO) forecast a global cocoa deficit of 45,000 tonnes for the 2012/13 season with production set to decline and grindings expand.
Cocoa prices had dropped sharply recently, pressured by a combination of favourable weather aiding West Africa's mid crop development and lagging forward sales from top growers Ivory Coast and Ghana, traders said. "There's going to be a big mid crop so the market has taken a bearish tone," said a London-based broker. May cocoa on Liffe gained 11 pounds, or 0.8 percent, to finish at 1,401 pounds per tonne.
May raw sugar futures on ICE gained 0.45 cent, or 2.5 percent, to 18.65 cents per lb at 12:22 pm EST (1722 GMT). Dealers said sugar prices were supported by a combination of rising diesel prices and the expected removal of taxes for ethanol in top producer Brazil.
Any move away from sugar into ethanol production could help deplete a large global surplus of the sweetener, which has been pressuring prices to recent 2-1/2-year lows. Meanwhile, the Brazilian government plans to exempt fuel ethanol from certain taxes at the pump to help the country's cane industry. May white sugar on Liffe increased by $10.30, or 1.99 percent, to $528.50 a tonne. ICE May arabica coffee rose 1.2 cents, or 0.8 percent, to $1.4235 per lb. May robusta coffee futures on Liffe climbed $44, or 2.1 percent, to $2,157 a tonne.