London cocoa and coffee futures broke out of recent ranges on Thursday and tumbled around two percent in late trade on profit-taking by funds, disappointed at the markets' failure to break higher, traders said.
Cocoa futures led the way, with the second position, December, closing off 25 pounds a tonne at 1,059 pounds, retreating further from the recent four-year of 1,146 pounds. "We broke through support, and that triggered liquidation by the funds," one trader said. Traders had put support at around 1,075 pounds, an area where industry buyers had been keen to pick up cover.
However, fund managers said the sell-off was only a temporary pullback and prices should bounce from here. "The market has come a long way and just because there's a bit of fund selling, it doesn't mean the bullish trend is over," commodities manager Rodolphe Roche at Schroders said.
"There are people who are thinking ahead to a big crop next year, but that might not turn out to be true," he added. But from the world's biggest grower Ivory Coast, there was more evidence that the main crop was looking in very good shape and could start to be harvested early. Farmers in Ivory Coast's western-most growing zones said they expected to start harvesting some of the abundant pods on their trees for the upcoming main crop as early as mid-August.
"This year, the production on my farm overwhelms me. There are so many pods I don't know if I will be able to harvest them all," said Kouame Oi Kouame, a farmer in Pinhou, in the Duekoue area which turns out around 250,000 tonnes of cocoa per year.
London robusta futures shed almost two percent, with the benchmark September closing down $35 at $1,801 a tonne. Dealers said the move, sparked by liquidation by some of the short-term longs, had been expected. It was not yet a signal that the large long position held by the funds in robustas was under threat.
SUGAR HIGHER: London white sugar futures bucked the trend to close higher as the market recouped this week's losses. Dealers said prices had edged up in thin conditions with October up $2.00 at $313.30 a tonne by the close.
Dealers said rains in Brazil's main cane growing areas had delayed harvesting and could help tighten nearby supplies, although the market was showing no sign of breaking out of this month's narrow range of $301.10 to $319.00, basis October.