New York cocoa futures on ICE firmed on late-day buying after tapping their lowest in more than three years on Thursday, while London prices fell to a 1-1/2-year low on fund selling as traders focused on expectations of a 2016-17 global surplus. Raw sugar prices turned up after tapping a two-month low, while coffee prices were mixed.
Cocoa prices in both the New York and London markets remained at technically oversold levels. March New York cocoa settled up $8, or 0.3 percent, at $2,419 per tonne after falling to $2,358, the weakest for the second position since August 2013. The transformation from a substantial global deficit in 2015/16 to a surplus has helped curb appetite for cocoa, with funds switching to a net short position in London and sharply cutting their net long position in New York.
"The bull story is over, and now we've got to look to a surplus situation and a flushing of the longs," one London dealer said, adding that position data on New York cocoa on Friday would be closely watched to see if commodities funds had also switched to a net short there. Another factor behind cocoa's price fall is an improved outlook for top grower Ivory Coast after favourable weather there in recent weeks.
March London cocoa settled down 1 pound, or 0.05 percent, at 2,001 pounds per tonne after dipping to 1,957 pounds, the weakest for the second position since April 2015. Raw sugar futures were little changed after setting a two-month low as the market found support following a 5.8 percent slide in the past two sessions, when prices were pressured by a large December white sugar delivery and data showing strong Brazilian output.
March raw sugar settled down 0.14 cent, or 0.7 percent, at 20.22 cents per lb, after dipping to 20.18 cents, its weakest since September 15. March white sugar settled down $3.30, or 0.6 percent, at $537.90 per tonne. In coffee, March arabica settled down 1.45 cent, or 0.9 percent, at $1.6295 per lb, not far from last week's nearly two-year high of $1.7955.
"The next key level of resistance at $1.80 would complete the long-term trend pattern that has been in play since the start of 2015 and would set the stage for a continuation of the bull run, albeit after some modest consolidation this month," said Sucden Financial in a report.