London coffee and cocoa futures set multi-year highs on Thursday as roasters and chocolate manufacturers came into the markets as buyers, giving added momentum to a rally led by investment funds, dealers said.
White sugar futures, however, ended lower with the market's focus back on a global glut of the commodity after a fund-led rally had taken prices to a 13-month high in mid-January.
"There has been industry and fund buying," one cocoa dealer said, explaining that industry buyers, who had initially held back during the recent run-up in prices, were now seeking additional cover. Heavy buying by funds has provided the main driving force behind a sharp rise in prices for both commodities this year.
Dealers said industry buyers had initially been reluctant to chase the market higher but had grown increasingly nervous during the last few days. "Once it has broken certain barriers down, people who have been holding off the market have just got to get in there and get something," another dealer said. Dealers said the rise in robusta coffee prices accelerated after the market breached the psychological $2,200 barrier.
May coffee closed up $23 at $2,215 a tonne after touching $2,218, the highest level for the second month since June 1997. An early strong advance in cocoa prices were tempered in late trade following news that staff at Ivory Coast's Coffee and Cocoa Bourse had suspended a five-day-old strike after winning additional pay.
May cocoa ended four pounds firmer at 1,250 a tonne after peaking at 1,279 pounds, the highest level for the second month since April 2003. Cocoa prices, which have now risen nearly 20 percent since the end of last year, have been boosted partly by dry weather in West Africa where about 70 percent of world supplies originate. Prices for robusta coffee, often used to make soluble or instant coffee, have risen about 16 percent so far this year.
London white sugar futures ended lower as the market eyed next week's expiry of the March contract. The front month ended down $3.50 at $327.00. Dealers said demand in the physical demand had largely dried up following last month's advance in prices and excess supplies may end up being delivered against March futures contracts in London and New York. March has slipped to a discount of about $15 to May, up from around $2 to $3 in early January. "Maybe the (March-May) spread could widen further," one dealer said.