Cocoa futures settled higher on Tuesday, trimming gains after weak US economic data cast a gloomy tone over the market, while arabica coffee on ICE changed direction and fell to a six-week low. Raw sugar also lost traction and ended at its lowest in nearly three weeks. The markets were weighed down along with the commodity complex on the heels of falling US consumer confidence and weaker-than-expected economic data in the country's Midwest.
Dealers said the cocoa market had already priced in the bearish impact of planned forward sales in Ivory Coast, the world's top cocoa producer, in which brokers sell futures as they buy physical cocoa. March cocoa on ICE finished up $11 at $2,291 a tonne. The contract fell nearly 7 percent in the two previous sessions as word spread that Ivory Coast would be holding the auction, sparking profit-taking by investors.
Liffe May cocoa futures climbed 7 pounds to settle at 1,511 pounds a tonne. "When you analyse what it means for the market, it is undoubtedly bearish. That doesn't mean it's bearish on a daily basis. I guess the market has priced in its initial reaction for now," said Jonathan Parkman, joint head of agriculture at brokerage Marex Spectron, referring to Ivory Coast's forward sales.
Ivory Coast's reform of its cocoa sector, vital for the country to obtain further debt relief, began in confusion on Tuesday as the regulator hailed the first forward-sales auction a success while exporters said they had boycotted the event. ICE March arabicas closed down 1.55 cents, or 0.7 percent, at $2.1505 per lb, the weakest settlement since December 16.
"It appears that the decline has really come from the weaker US economic data that came out in addition to some concerns out of Portugal," said Spencer Patton, founder and chief investment officer of commodities-based hedge fund Steel Vine Investment, in Nashville, Tennessee. Dealers said Brazil's crop forecast remained around 54 million to 56 million 60-kg bags, above Brazilian crop supply agency Conab's estimate of 49 million to 52.3 million bags.
March robusta coffee on Liffe eased $7, or 0.4 percent, to end at $1,836 a tonne. Raw sugar futures on ICE hit the lowest level in nearly two weeks, with an expected global surplus weighing on the market. March raw sugar futures on ICE fell 0.21 cent, or 0.9 percent, to close at 23.64 cents a lb, the lowest since January 12.
Monday marked the first session of extended trading hours on ICE to attract more Asian business. Volume traded on the raw sugar futures contract totalled 89,699 lots on Monday, up 22 percent from the 30-day average, Thomson Reuters data showed. London March white sugar futures finished down $4.00, or 0.6 percent, at $630.20 per tonne.