London cocoa futures hit a two-week high on Thursday on weaker sterling and fears over a cut in output in Ivory Coast, but worries about a glut in supply dragged down sugar to its lowest level in more than two months. "There's plenty of sugar everywhere," said Romain Lathiere, fund manager at Diapason Commodities Management.
August sugar contract hit a low of $318.0 a tonne, its lowest level since March 20 after the dollar rallied against other currencies and triggered fund and chart-based selling. The contract settled $4.7 a tonne lower at $320.0.
ICE July raw sugar futures fell 0.20 cent to 9.91 cents a lb but there were talks of buying of the spread between the spot month and back months by a trade house positioning itself for a possible purchase of raw sugar by Venezuela.
Lausanne-based consultancy Kingsman SA revised its estimate of the 2007/08 global sugar surplus to 11.34 million tonnes from a 9.13 million tonne surplus previously, while Czarnikow forecast a surplus of 11 million in 2007/08.
Cocoa defied a firmer dollar and jumped to its highest level in two weeks on news farmers main grower Ivory Coast have fallen behind with fertiliser and pesticide treatments, threatening to cut output in the 2008/09 main crop.
September cocoa futures hit a high of 1,465 pounds a tonne, its highest level since mid-May, before settling at 1,458 pounds, up 60 pounds from Thursday's settlement. Volume was a heavy 5,146 lots. Short covering and technical buying also lifted cocoa prices, with dealers expecting the September contract to find key resistance at 1,480 pound. Support was pegged at between 1,380 and 1,400 pound.
ICE July cocoa jumped $92 a tonne to $2,714 tonne.
London July coffee contract settled $34 a tonne lower at $2,246, having earlier hit a high of $2,285 a tonne, its highest level in a week.
Range-bound trade was expected for London futures, and early fund buying tapered off as the dollar gained. Trading range for July contract was seen at between $2,200 to $2,400 a tonne in coming weeks. ICE July arabica futures fell 2.60 cents to $1.3300 an lb.