December cocoa futures jumped more than 4 percent on investment fund and options-related buying on Friday, dealers said. Sugar and coffee futures fell in moderate volumes, under pressure from a stronger dollar. March cocoa in London ended 76 pounds higher at 2,174 pounds a tonne. Market buoyed by buying by granters of December options with prices for the front month rising to 2,150 pounds, the strike price for a large volume of call options.
March white sugar in London down $11.10 at $597.70 a tonne, weighed partly by stronger dollar. London January robusta coffee higher at $17 at $1,344 a tonne with the robusta market's discount to arabicas narrowing slightly after widening earlier in the week. London cocoa surged in the afternoon, dragging the US market with it. "It's a combination of technical buying, (buy) stops going off, and people protecting their options," one London cocoa trader said.
The cocoa market is focused on the expiry of December options in London at the end of this month. Dealers said most of the interest was centred in December calls at 2,150 pounds and 2,200 pounds. "I think until we get December options off the board the market is going to stay quite buoyant," another dealer said. Dealers said the market found support from industry buying earlier this week when it helped it rebound from a low of 2,041 pounds on the March contract.
In sugar, dealers talked of an overhang of prompt physical raws looking for homes. Dealers saw tight sugar supplies in the medium term due to expectations of a global deficit again in 2009/10, and forecasts for big physical import demand by India, the world's leading consumer of the sweetener, after a dismal domestic crop.
They said the longer that Indian farmer protests over cane prices continue, the greater the likelihood that India will import a hefty tonnage of refined, or white, sugar as mills will not have processed enough raws. The European Commission said on Friday it had allocated 1.5 million tonnes of cereal and nearly 35,000 tonnes of sugar in its intervention stock in 2010 to help the poor in the bloc.