Cocoa eased on Wednesday with concern about possible softer demand linked to the economic downturn encouraging profit taking after last month's advance. Coffee and sugar prices also fell, weakened partly by a firmer dollar, dealers said. "There is an element of rumour about demand being weaker than people thought. It is nothing concrete but has encouraged some of the longs to take profits," one dealer said.
May cocoa futures in London ended seven pounds lower at 1,946 pounds a tonne. The contract peaked at 2,023 pounds in late January, the highest level for the benchmark second month in nearly 24 years. ICE May cocoa fell $12 to $2,737 a tonne. Dealers said the combination of weakening demand and recent relatively strong port arrivals figures in top producer Ivory Coast may lead to some downward revisions in global deficit estimates for 2008/09.
A Reuters poll issued in late January produced an average estimate of a global cocoa deficit of 65,000 tonnes in 2008/09. Dealers said fund rolling forward of long positions out of March into May had been narrowing the front month's premium in the last few days, trading on Wednesday at about 15 to 16 pounds versus a peak of 50 pounds last month.
Cocoa farm-gate prices in Ivory Coast's main growing regions extended gains to exceed 750 CFA francs ($1.49) per kg last week, propelled by firm competition for supply amid concern about crop size, farmers and exporters said on Wednesday. Sugar prices eased following the market's repeated failure to breach key resistance just above 13.00 cents a lb, basis March raws on ICE.
Dealers said a stronger dollar and overhead producer selling were weighing on the sugar market. March raws stood 0.04 cent lower at 12.62 cents a lb at 1743 GMT. The contract peaked at 13.07 cents on Tuesday before producer selling halted the advance and twice early last week rose as high as 13.05 cents before falling back. London March white sugar futures finished $3.90 lower at $379.90 per tonne.
Dealers said news on Tuesday that India was allowing duty-free raw sugar imports and Pakistan had authorised a state agency to import 200,000 tonnes of refined sugar had failed to generate sufficient buying to break out of the current range. March arabica futures eased 3.25 cents to $1.1600 per lb by 1743 GMT while May robusta futures in London ended $57 lower at $1,616 a tonne.