London cocoa soars on weakness in sterling

London cocoa futures rose on Monday, boosted by the weakness of sterling, although the prospect of another large crop in Ivory Coast in the 2019/20 season helped to limit gains. New York-based cocoa, arabica coffee and raw sugar contracts were closed on Monday for a US public holiday. December London cocoa closed 7 pounds, or 0.4%, higher at 1,716 pounds a tonne, edging away from a 3-1/2-month low of 1,684 pounds set on Friday.
Sterling fell sharply on Monday as British Prime Minister Boris Johnson summoned his ministers for an emergency meeting, fuelling expectations he was preparing to call a snap election should lawmakers this week vote to delay Brexit. Dealers said the market's recent weakness had been driven partly by the prospect of a large crop in Ivory Coast in the 2019/20 season, which starts of Oct. 1, despite disease concerns linked to recent heavy rains.
"The now consistent reports of good growing conditions in Ivory Coast, which make an early start and another high crop likely in 2019/20, are depressing the cocoa price," Commerzbank said in a market note. October white sugar ended $3.30, or 1.1%, higher at $304.90 per tonne. The front month had dipped to a 1-1/2 month low of $301.00 on Friday.
Dealers said short-term fundamentals remained bearish but the scope for a rebound if funds were to start covering a large net short position in raw sugar was providing some support. Speculators lifted their net short position in raw sugar on ICE Futures US in the week to Aug. 27 to its highest in nearly three months, US government data showed on Friday.
"The action since then suggests the short has only grown larger, and is quite possibly now at record levels," analyst Tobin Gorey of Commonwealth Bank of Australia said in a note. "Investors exiting from that position is going to be a big event for the sugar market. In our view though the trigger for that buying is still some way off." Dealers also noted that supplies should tighten in the 2019/20 season when a global deficit is widely anticipated.
The International Sugar Organization on Monday forecast a global sugar deficit of 4.76 million tonnes in the 2019/20 season, driven partly by lower production in India and Thailand. November robusta coffee ended $5, or 0.4%, lower at $1,329 per tonne.