New York cocoa futures found some support on Tuesday after prices had fallen to their lowest level in almost a decade on market concerns over a wave of defaults in top grower Ivory Coast. The prospect of a large global surplus this season has led to a 10 percent fall in London cocoa futures since the start of the year, while New York has lost nearly 9 percent.
New York cocoa initially fell 1.7 percent to $1,893, the weakest for the second position since October 2008, although it later found some technical support and was up $1, or 0.05 percent, at $1,926 a tonne by 1554 GMT. Ivorian cocoa has been resold this month after some local exporters defaulted on contracts that were no longer profitable following a sharp drop in prices.
Dealers said there was uncertainty about how much cocoa in Ivory Coast still needed to be sold. "I think the vast majority of the selling has been done," said Jonathan Parkman, head of agriculture at Marex Spectron. "We're probably near the other side of it. But it's created a very unsettled feel in the market."
Concerns were fuelled by reports last week of cocoa rotting on trees and piling up in warehouses, with producers struggling to find buyers. Good weather in Ivory Coast has raised expectations for a large crop in the country, which should contribute to a global surplus in 2016/17 of around 250,000 tonnes.
May London cocoa was down 2 pounds at 1,572 pounds a tonne, after falling to 1,541 pounds, its weakest in more than 3-1/2 years. March raw sugar futures were up 0.27 cent, or 1.35 percent, at 20.27 cents per lb, while May white sugar rose $6.80, or 1.27 percent, to $544.10 a tonne. Dealers said the sugar market had moved back up into its recent trading range after testing support levels on Monday.
A total of 142,050 tonnes of white sugar has been tendered against the ICE March contract which expired on Monday, exchange data showed.
It comprised 92,050 tonnes of Guatemalan sugar with a load port of Puerto Quetzal and 50,000 tonnes of Mexican sugar with a load port of Veracruz. Robusta coffee was marginally higher, with March up$1, or 0.05 percent, at $2,140 a tonne. March arabica coffee was up 0.20 cent, or 0.14 percent, at $1.4445 per lb. Brazil's agriculture minister said on Monday he had asked the country's Foreign Trade Chamber for authorisation to open robusta coffee imports at near zero tariff.