Cocoa futures soared 4 percent in heavy volume on Monday, in a corrective rally spurred by crop weather concerns in top grower Ivory Coast and oversold market conditions, causing the New York market to make its biggest jump in 3-1/2 years. Raw sugar fell sharply to a four-month low on weak charts, after a mid-session rally stalled, while coffee prices were mixed.
March New York cocoa settled up $107, or 3.9 percent, at $2,868 per tonne after trading in a wide $131 range, with extra support from the strong British pound versus the US dollar. The contract fell by 14 percent last month, its biggest drop in more than four years, taking prices to what traders considered over-sold levels.
"Cocoa's rallying today on short-covering and the weak dollar," said Nick Gentile, managing partner of commodity trading advisor NickJen Capital in New York. "I think the market was a little shocked that there wasn't more liquidation in the New York COT (Commitment of Traders report)."
On Friday, the report showed speculators cut their net long position by less than 3,000 lots, taking it to the smallest since April 2015. Also bullish for the market was a week of hot conditions and intense dry winds across Ivory Coast cocoa-growing regions, that farmers said risked hindering the development of the upcoming mid-crop harvest.
March London cocoa settled up 58 pounds, or 2.9 percent, at 2,067 pounds per tonne. Raw sugar futures bounced on short-covering but then tumbled on technical sell signals below 13 cents, traders said. Prices fell for the seventh straight session, with total open interest rising for the past six days, exchange data showed. "Once the funds have stopped liquidating, we may see a sharp reversal of fortunes," said Nick Penney, senior trader with Sucden Financial.
March raw sugar settled down 0.31 cent, or 2.4 percent, at 12.83 cents per lb, after falling to a four-month low at 12.73 cents and trading in an unusually wide range of 0.67 cent. The price slump came despite a Sunday forecast by data provider Platts, calling for a global deficit of 4.86 million tonnes for 2015/16 and a shortfall of 7.2 million tonnes in 2016/17. March white sugar futures settled down $4.90, or 1.2 percent, at $402.10 per tonne. March arabica coffee futures settled up 1.4 cent, or 1.2 percent, at $1.1775 per lb. March robusta, however, settled down $7, or 0.5 percent, at $1,375 per tonne.