Cocoa futures jumped more than 3 percent on Friday, defying broad weakness in commodity markets, lifted by higher-than-expected grind data in Europe and on technical buying a day after prices bounced like a pogo stick off support levels.
Raw sugar futures sank 3.5 percent to close at the lowest level in three months, under pressure from a firmer US dollar and broad weakness in the commodity complex, as copper and oil fell on data showing China's economy grew at its slowest pace in nearly three years. Arabica coffee turned lower.
Cocoa markets maintained upward momentum after the London market staged a key reversal on Thursday and New York cocoa turned up after selling attempts to set a new low failed. Buying was fuelled by European grind data for the first quarter, which exceeded expectations and came in flat at 353,311 tonnes.
"I'm viewing this more as a technical reversal that started yesterday and it's getting a little bit of help from the grind figure," said Drew Geraghty, a commodity broker at ICAP North America in New Jersey. July cocoa on ICE closed up $57, or 2.7 percent, at $2,200 per tonne, after peaking up 3.5 percent at $2,217, the highest level since April 2.
The May/July spread remained active ahead of the May contract's first notice day on Tuesday, when the market first inverted, and soared to close at a $48 premium from $17 on Thursday. "I think the trade caught some of the guys short and they turned it around," Geraghty said about the cause for the inverted market.
London July cocoa rose 40 pounds, or 2.8 percent, to settle at 1,458 pounds per tonne, after climbing 3.5 percent earlier. "This is very friendly to the market," said a European fund manager of the grind data. "Given how good the grind numbers have been in other regions over the last five months, we would have expected this number to be 5 to 10 percent down."
May raw sugar on ICE tumbled 0.85 cent, or 3.5 percent, to close at 23.37 cents a lb, the lowest settlement since January 12 for the spot contract. Losses were extended after falling below the 100-day moving average at 23.82 cents. London May white sugar futures dropped $7.80, or 1.2 percent, to close at $624.40 per tonne, the lowest for the spot contract since February 15. July arabicas on ICE sank 4.05 cents, or 2.2 percent, to finish at $1.8020 per lb, while benchmark Liffe May robusta coffee futures closed up $2 at $1,998 per tonne.