Cocoa futures on ICE rallied on Thursday, bucking the sharply lower trend in other commodity markets on support from the weak US dollar index and chart-based buy signals. Sugar and coffee futures tumbled on broad-based selling, as the 19-market Thomson Reuters CoreCommodity Index tumbled to a nine-month low. July London cocoa settled up 50 pounds, or 3.6 percent, at 1,440 pounds per tonne, and July New York cocoa settled up $59, or 3.3 percent, at $1,839 per tonne.
Both markets extended a bounce above multi-year lows reached on April 20, which were viewed as providing technical support levels, but expectations for a global surplus kept sentiment bearish, traders said. "All fundamental signals are still bearish, so this may be a short-lived recovery," said Peter Mooses, senior market strategist for RJO Futures in Chicago. Total open interest in New York cocoa futures rose for the fifth straight session to reach a record 310,218 lots on Wednesday, when prices fell back near multi-year lows, exchange data showed.
July raw sugar settled down 0.4 cent, or 2.5 percent, at 15.37 cents per lb, following larger commodity markets lower while expectations of ample supplies provided bearish sentiment. August white sugar settled down $7.70, or 1.7 percent, at $442.50 per tonne, the lowest since April 2016. Sentiment was also dampened by signs of slowing imports from Myanmar, seen as a route into China.
"Unless there is a weather event or a change of heart from importers, there is little around to encourage the bulls, save the natural 'floor' presented by ethanol parities in Brazil," said Nick Penney, senior trader at Sucden Financial. July arabica coffee settled down 2.5 cent, or 1.8 percent, at $1.3495 per lb, with dealers pointing to resistance at $1.37.
"It's macro. It's a massive sell-off day," said one US trader, adding that the low levels were not attractive to producers while speculators sold on expectations for a large 2018/19 crop in top grower Brazil. July robusta settled down $42, or 2.1 percent, at $1,992 per tonne, triggering sell-stops below the psychological support level of $2,000, traders said.
"I think people aren't really moving away from that view that there is a problem with robusta," one dealer said. Exports of robusta from Indonesia's main growing area of Lampung surged by 140 percent year-on-year in April, local government data showed.
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