Cocoa futures tumbled on profit-taking Friday, falling for the first time in six sessions, as concern waned about government turmoil in top grower Ivory Coast. Arabica coffee futures on ICE Futures US eased in a quiet session, consolidating just above the prior session's two-year low, as the prospect of index reweighting underpinned prices. Sugar prices were choppy and little changed.
ICE March cocoa fell $85, or 3.4 percent, to finish at $2,398 per tonne, largely erasing the gains made earlier in the week after the unexpected dissolution of the Ivory Coast government. The contract rose to a three-week high of $2,488 on Thursday. Ivory Coast President Alassane Ouattara dissolved his government in a surprise move on Wednesday, citing a lack of solidarity within his coalition cabinet. Dealers said the situation in Ivory Coast seemed to have resolved itself and the run-up in cocoa prices had not been sustainable.
ICE cocoa futures open interest surged 2.3 percent to more than 185,500 lots on Thursday, showing investors went long and giving other investors an incentive to knock the market down. The move lower triggered automatic sell stops along the way, dealers said. The move lower extended the premium of December to March on the spot contract's first notice day. It closed at a $59 premium in thin volume, its biggest since May 14 and a huge jump from $19 the previous session.
"If you're short now, you have to cover because they're not putting cocoa on the board," the US dealer said, noting there were no delivery notices. Benchmark Liffe March cocoa futures dropped 49 pounds, or 3.1 percent, to settle at 1,553 pounds per tonne, giving back gains from the past two sessions. March arabica coffee futures fell 1.50 cents, or 1 percent, to finish at $1.5250 per lb. The contract sank to $1.4945 on Thursday, the lowest level for the second month since June 2010, because of comfortable supply and rising stocks following a large harvest in Brazil.
Dealers said the downside was limited as index reweighting was set to underpin the market while it consolidated after Thursday's intraday tumble. January robusta coffee futures inched down $2 to close at $1,901 a tonne in a choppy session. The contract dipped to $1,891 on Thursday, the lowest level for the second month since February 8.
March sugar futures closed up 0.11 cent at 19.15 cents a lb. The front month fell to 18.66 cents last week, the lowest level for the contract since August 2010. March white sugar on Liffe rose $2.60, or 0.5 percent, to end at $509.30 per tonne. NYSE Liffe said on Friday that 8,496 lots of white sugar, or 424,800 tonnes, had been tendered against the expiry of the December contract, the largest delivery in more than five years.