Cocoa surges

ICE cocoa futures climbed the most in ten months on Tuesday, on news that Ivory Coast has forward sold a large portion of its new crop ahead of schedule, prompting worry over tightening supplies in the world's top producer. Raw sugar futures slipped to a three-year low on origin selling of a bumper crop in Brazil, while Liffe robusta futures hit an almost two-month high.
The September cocoa contract on ICE Futures US closed up $68, or 3.1 percent, at $2,289 a tonne and touched a one-month high of $2,295, as the second month climbed the most since early September. September cocoa futures on Liffe finished up 37 pounds, or 2.4 percent, at 1,582 pounds a tonne after touching 1,588 pounds, the second month's highest level since December.
Ivory Coast has forward sold 750,000 tonnes of the 2013/14 crop as of the end of June, roughly half of the country's average annual production in the past three years. The move puts the government close to its forward sale target of 80 percent, leaving the country with less selling left to do and stirring concern over available supplies in the new crop year that begins on October 1. "It puts the industry in a really tight spot, because they have to buy every day to replace usage," said a veteran cocoa dealer in the United States.
"The specs are not going to be sellers. If they turn buyers here and the market runs up, the industry has to follow it and producers have nothing to sell into the fourth quarter." Speculators hold net long positions in both ICE and Liffe cocoa futures and options. North American quarterly grind data will be released on Thursday, with dealers expecting to see a rise of 2 to 5 percent year-over-year.
October raw sugar on ICE closed down 0.16 cent per lb, or 1 percent, at 16.00 cents a lb, after falling to $15.93 cents a lb, the weakest level for the front month since July 2010, as hefty supplies and producer selling weighed. The Brazilian real weakened against the dollar, encouraging shippers in the world's top grower to sell the dollar-traded commodity to mitigate currency losses.
Raw sugar erased earlier gains as origin selling picked up at a session high around 16.20 cents a lb. The descent to a previous low of 16.02 cents a lb triggered sell stops, dealers said. Liffe October white sugar edged up $2.70, or 0.6 percent, to settle at $483.0 a tonne. Dealers expected a modest delivery tonnage of about 100,000 against the August expiry on Tuesday, with origins of Brazil, Thai, Central American, and Mexican sugar expected.
Liffe September robusta coffee closed up $42, or 2.2 percent, at $1,946 a tonne, after hitting $1,965, the highest level for the second month since late May. ICE September arabica futures finished up 2.7 cents, or 2.2 percent, at $1.2595 per lb, as second-month prices climbed further from a four-year low of 1.1710 cents a lb hit on June 20.