New York cocoa climbs as charts strengthen, sugar turns up

Cocoa futures on ICE rose on Monday, with New York prices rallying more than 2.5 percent on chart-based buying after a potentially bullish technical pattern formed below the market, while raw sugar turned higher. The markets rose along with the 19-commodity Thomson Reuters CoreCommodity Index that rallied to a 9-1/2-month high as oil prices climbed.
March New York cocoa settled up $53, or 2.6 percent, at $2,109 per tonne. The 50-day moving average crossed above the 200-day moving average by $1, potentially forming a pattern called a "golden cross," which can indicate higher prices to come. The technical formation attracted chart-based buying, traders said. Position rolling out of December into March boosted volume, they said.
The rally came after data late Friday showed speculators reduced their net short position for the eighth straight week. December London cocoa settled up 26 pounds, or 1.7 percent, at 1,585 pounds per tonne. March raw sugar settled up 0.18 cent, or 1.3 percent, at 14.56 cents per lb.
"With the largest sugar producer in the world in Brazil diverting as much sugar cane to ethanol versus processed sugar as possible, and with the Indian sugar crop rising much more modestly than was originally expected, it is hard to see the basis for much lower sugar prices," said Shawn Hackett, president of Hackett Financial Advisors in a note. "This will now keep global sugar stocks much tighter than was originally expected providing very little cover for any weather problems that may arise in the month ahead," Hackett said.
Brazil's Copersucar, the world's largest sugar merchant, expects the country's center-south mills to increase ethanol production next season, Chairman Luis Roberto Pogetti told Reuters. March white sugar settled up $2.50, or 0.7 percent, at $380 per tonne. January robusta coffee settled down $1, or 0.05 percent, at $1,855 per tonne, despite potential crop losses in top grower Vietnam.
Deadly typhoon Damrey moved into a key coffee-growing region of Vietnam, having damaged some trees, though farmers said their initial assessments suggested the impact was limited. December arabica coffee settled up 1.6 cents, or 1.3 percent, at $1.2555 per lb. Top coffee grower will harvest 55 million to 57 million bags in 2018-19, down from prior expectations of 60 million to 62 million, following hot and dry weather, Hackett said.