Cocoa futures bounced higher on Tuesday as dealers expressed relief that the latest European grind data was in line with expectations, while sugar and arabica coffee moved higher in thin dealings. Europe's third-quarter cocoa grind, an indicator of demand for the key ingredient for chocolate, fell 16.2 percent from the same period last year to 316,676 tonnes, in line with expectations for a 15 to 20 percent fall.
"Global cocoa demand is hardly likely to increase unless there is a recovery in Europe, meaning that the supply deficit for the 2012/13 crop year envisaged by the ICCO (International Cocoa Organisation) will probably turn out to be lower," Commerzbank said in its daily note. Last month the ICCO said it expects a global cocoa deficit in 2012/13 because of a lack of rain in West Africa, but it also expects an overall rise in demand, driven by emerging markets.
ICE December cocoa closed up $64, or 2.7 percent, at $2,418 a tonne, after dipping to $2,338 on Friday, its lowest level since July 31 on a second-month continuation chart. Its 200-day moving average around $2,343 continued to provide strong support. "It came in within expectations and I think it was already priced into the market. That's why the market rallied today," said Nick Gentile, chief trader at Atlantic Capital Advisors.
March cocoa futures on Liffe settled up 34 pounds, or 2.2 percent, at 1,557 pounds a tonne. The contract traded between its long-term moving averages, finding support around the 200-day moving average around 1,533 pounds and stopping short just below the 100-day moving average at 1,561 pounds. Germany's third-quarter 2012 cocoa grind fell 29.92 percent on the year to 86,708 tonnes, while grindings in Asia were in line with the previous year, the regional associations reported.
Sugar futures were higher in thin dealings, as dollar-priced commodities were supported by the weaker currency, making them cheaper in foreign currencies. ICE March raw sugar futures moved higher, rising 0.32 cent, or 1.6 percent, to close at 20.17 cents a lb, after touching a three-week low of 19.81 cents a lb on Monday. December white sugar on Liffe rose $3.60, or 0.6 percent, to end at $557.90 a tonne.
Arabica coffee futures edged higher, remaining stuck within their recent range, as ample supplies and producer selling capped potential upside. "Brazilian producers are of the view that if it rallies a bit they'll sell," a London-based broker said. December arabica coffee futures on ICE rose 1.95 cent, or 1.2 percent, to close at $1.6280 per lb after touching $1.5950 on Monday, the lowest level for the front month since September 6.
Coffee producers in Brazil, the world's top grower, have sold 43 percent of the now-harvested 2012/13 crop, a slower pace than last year, when 56 percent of the crop had already changed hands, Brazilian agriculture consultancy Safras & Mercado said on Monday. January robusta coffee futures inched up $1 to settle at $2,065 a tonne.