Fund and investor buying drove London futures to a two-month peak and US cocoa futures to a four-month high and on Tuesday, triggered by a weakening dollar and a strengthening commodities complex, dealers said.
Sugar and coffee also rose on fund and investor buying led by the retreating greenback and a stronger CRB commodities index, pushed up by oil which snapped a two-day slide, climbing above $69 per barrel. "The strong crude oil will give support to all commodities," said Romain Lathiere, Swiss-based fund manager with Diapason Commodities Management.
Traders said fund buying drove cocoa to fresh peaks as the euro extended gains against the dollar. "There has been quite a good rebound on the euro, so maybe this is the kind of thing that can help the cocoa market," Lathiere said. ICE September cocoa futures surged $74 or 2.7 percent to $2,788 per tonne at 1428 GMT, having earlier hit a four-month high of $2,802.
London September cocoa was up 15 pounds to 1,780 pounds per tonne, after touching a two-month high of 1,793. "It's basically moved up with aggressive buying by funds in a market that's a bit devoid of selling," a cocoa trader said. Cocoa traders said a dockers' protest in top grower Ivory Coast did not appear to have moved the market.
In cocoa, dealers noted a favourable mix of rain and sunshine in West Africa, auguring well for mid crops. Sugar and coffee futures also extended gains as the dollar weakened. According to the latest figures from the Sao Paulo-based Sugar Cane Industry Association (Unica), Brazil's 2009/10 centre-south cane crush surged 62 percent by May 16, as cash-strapped mills accelerated harvesting and weather conditions turned out favourable.
ICE July raw sugar futures were up 0.2 cent to 15.57 cents per lb at 1439 GMT while London August white sugar was up $3.50 to $446.10 per tonne in slim volume of 860 lots. ICE July arabica coffee futures rose 2.1 cents to $1.3215 per lb, while London September robusta futures edged up $11 to $1,560 per tonne in slim turnover of 1,658 lots.