ICE cocoa at three-year high

Cocoa futures on ICE rallied to a three-year high in exceptionally heavy volume on Wednesday as physical cocoa prices exceeded futures and holders of short positions in the nearby contract scrambled to close them, traders said. Arabica coffee on ICE Futures US surged more than 5 percent to a four-week high when a broker issued a bullish report after touring parts of top grower Brazil's drought-damaged coffee belt. Sugar futures eased.
Cocoa futures on ICE jumped, with September closing up $54, or 1.7 percent, at $3,185 a tonne, having earlier hit a three-year high of $3,204 ahead of first notice day August 18. Total volume exceeded 68,000 lots, more than triple the 250-day average for a full session, preliminary Thomson Reuters data showed. December cocoa on Liffe rose 13 pounds, or 0.7 percent, to end at 1,938 pounds a tonne, after touching a contract high at 1,950 pounds. "If the physical market is paying you vastly above what the exchange is paying, then no one wants to deliver," a European analyst said.
On Friday, good quality Ivory Coast beans were quoted at 75 pounds per tonne over the London September bean contract. The market surged on a combination of heavy short-covering and technical buying after prior resistance at $3,150 was breached on ICE, triggering a wave of buy-stops, dealers said.
The premiums on the nearby September contracts widened versus later contracts, with ICE surging intraday to $62, the highest since June 2013, and Liffe to 53 pounds, a nine-month high. In London, this was attributed in part to low levels of exchange-certified stock, a London-based broker said. Arabica coffee futures on ICE rallied in thin dealings after brokerage INTL FCStone reported cases of "irreversible" damage and early flowering after visiting two main arabica growing regions in Brazil last week.
ICE September arabica coffee surged 8.30 cents, or 4.9 percent, to close at $1.7660 per lb, the highest since June 27. Robusta coffee futures on Liffe were little changed, with September closing up $1 at $1,994 a tonne. Arabica coffee prices are expected to add to this year's exceptional gains to rise a further 7 percent by the end of the year as the global market switches to a deficit, a Reuters poll of 26 traders, roasters and analysts found. Raw sugar futures on ICE eased, with October settling down 0.20 cent, or 1.2 percent, at 16.96 cents a lb. October whites on Liffe dropped $4.80, or 1.1 percent, at $447.20 per tonne.