London cocoa slips, raw sugar weakens

London cocoa futures rose to the highest level in almost three weeks on Tuesday before gains were eroded as a short-covering rally ran out of steam. Prices had risen early to reflect gains in New York cocoa on Monday, when London-based contracts had been shut for a British public holiday.
December London cocoa was up 12 pounds, or 0.8 percent, at 1,540 pounds a tonne by 1320 GMT after peaking at 1,574 pounds in early trade, the highest for the second position since Aug. 10. "London seems to be playing catch-up after New York gains (on Monday), which seem to have been sponsored by an increase in the US spec (short) position," one dealer said.
The speculative net short position in New York and London cocoa rose substantially in the week to Aug. 22, according to US government and exchange data. Dealers said the scope for further gains may be limited with no clear justification on fundamentals for a significant rise in prices. Abundant rain mixed with sunny spells last week in most of Ivory Coast's main cocoa-growing regions boosted prospects for the upcoming main crop in the world's top producer, farmers said on Monday.
December New York cocoa fell $41, or 2.1 percent, to $1,956 a tonne. October raw sugar was down 0.12 cent, or 0.8 percent, at 14.19 cents per lb. The front month had peaked at 14.35 cents on Monday, its highest since Aug. 4. Dealers said the recent run-up in prices had been fuelled by fund short-covering while producer selling had helped to stall the advance.
"Producers have been waiting for this short-covering and are already taking advantage of it on a scale-up basis," said Sucden Financial senior trader Nick Penney in a market note. October white sugar rose $2.80, or 0.7 percent, to $387.50 a tonne, reflecting gains in raws on Monday when London-based markets were shut. November robusta coffee fell $5, or 0.2 percent, to $2,107 per tonne as the market consolidated after a sharp rise in prices late last week. Dealers said the market was underpinned by a fall in exports from top robusta producer Vietnam.
Coffee exports from Vietnam will drop an estimated 19.4 percent in the first eight months from the same period last year, the General Statistics Office said on Tuesday. "Lower coffee supplies from Vietnam and Brazil have been supportive to coffee prices," ING said in a market note. December arabica coffee fell 1.35 cents, or 1.0 percent, to $1.30 per lb.