ICE cocoa fell on Monday, retreating from a two-year high as investors took profits, while ICE sugar climbed to a seven-month peak, buoyed as rainfall slowed the final leg of the cane crush in top grower Brazil and on an improved technical outlook. Arabica coffee futures on ICE gained in light volume on short-covering as dealers eyed the development and flowering of the crop in top grower Brazil.
Front-month December cocoa on ICE Futures US fell $33, or 1.2 percent, to settle at $2,713 per tonne. Investors took profits after the contract hit a two-year high of $2,757 during the session. Chart-based investor and fund selling triggered the retreat from the high.
December cocoa on Liffe closed down 26 pounds, or 1.5 percent, at 1,753 pounds a tonne, after climbing nearly to Friday's two-year high, basis front month, of 1,781 pounds a tonne. Cocoa grindings in Malaysia dropped 3.1 percent to 71,150 tonnes in the third quarter of this year compared with the same period in 2012, the Malaysian Cocoa Board said on Monday, a sign of reduced demand.
Producer hedging added pressure. "Origins have been active in the market. There has been some forward Ivorian selling around," a London-based cocoa futures broker. Dealers said expectations of a substantial global deficit in 2013/14 underpinned the market, limiting cocoa's losses. Port arrivals in top producer Ivory Coast totalled 64,000 tonnes by October 13, an increase of 15,000 tonnes from the same period last year. ICE March raw sugar futures rose 0.12 cent, or 0.6 percent, to finish at 19.05 cents a lb after striking a seven-month high of 19.11 cents.
"A big part of this rally has come from the specs covering shorts," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors. Front-month raw sugar prices have surged from a three-year low on 15.93 cents a lb set in mid-July, leaving sugar with more bullish technical outlook and driving further buying, dealers said.
In the absence of Commitments of Traders data for the second straight week due to the partial US government shutdown, Jonathan Kingsman, head of agriculture at data provider Platts, said he estimated the net fund long at some 135,000 lots. "This is not that long. The funds could still buy more," Kingsman said. Noncommercial dealers turned bullish, and rains have hampered crushing of a huge cane crop in top grower Brazil.
Rains may disrupt late harvesting in key growing areas, but will provide soil moisture beneficial for the new crop's development, MDA Weather Services said in report. Biweekly industry data last week showed that wet weather continued to reduce cane mills' output in Brazil, supporting sugar's recent gains. Traders remained uncertain as to whether a huge delivery against the ICE October contract expiry and recent purchases by large trading firm Louis Dreyfus Corp were bullish signals for prices.
Thai raw sugar premiums could trade in a wide range this week, with the market shrugging off a deadly cyclone in India. December white sugar on Liffe closed up $1.40, or 0.3 percent, at $508.10 a tonne. ICE December arabica coffee futures edged up 0.30 cent, or 0.3 percent, to settle at $1.17 per lb.
"We're not seeing a whole lot of volume. We've got some short-covering," said Sterling Smith, a futures specialist with Citigroup in Chicago. Traders eyed the development of a huge crop in Brazil and the potential that heavy rains over the coming weeks that could affect flowering in the top producer. The ICE front-month contract had dipped to $1.1105 on September 17, a more-than-four-year low, pressured by expectations of abundant global supplies.
The most-active November robusta coffee contract on Liffe firmed $5, or 0.06 percent, to finish at $1,734 a tonne. Second-month January robusta coffee in Liffe closed up $7, or 0.3 percent, at $1,721 a tonne, climbing further from the second month's three-year low of $1,596 set in late September. Even so, harvesting in top robusta coffee producer Vietnam should gather pace, with analysts generally expecting a large crop.
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