Cocoa futures on ICE surged in heavy volume on Monday, after a wave of buying lifted prices further above technical support levels that spurred short-covering, with the London market seeing its biggest one-day jump since 2012. The US markets opened one hour late, and will do so for the next two weeks because of the change to daylight savings time. May New York cocoa futures settled up $83, or 4.3 percent, at $2,017 per tonne, the second-position contract's biggest one-day jump since February 15.
The rally coincided with the release of data that showed speculators held a record net short position as of March 7, while total futures open interest also rose to a record. Technical traders eyed support around a series of session lows in the past month from $1,869-$1,890. "Some longs pushed it up through some technical levels," said one trader, adding that short-covering accelerated the rally. "I think the only bullish argument one can make is from a technical perspective," said one dealer. "Whereas, fundamentally, people are still seeing surpluses that could easily weigh on the market."
May London settled up 64 pounds, or 4 percent, at 1,659 pounds per tonne, its biggest one-day rally since August 2012. ECOM has agreed to buy the factory of German cocoa grinder Euromar Commodities GmbH, Euromar's insolvency administrator said. May Arabica settled up 1 cent, or 0.7 percent, at $1.4235 per lb. Dealers pointed to chart-based selling as the driver, with technical support eroding after futures fell below the key psychological $1.40 level.
"The market hasn't been moving necessarily on the actual fundamentals," said one dealer. "It seems to be more of a function of fund flow based on macroeconomic indicators." May robusta settled down $6, or 0.3 percent, at $2,164 per tonne. May raw sugar futures settled down 0.04 cent, or 0.2 percent, at 18.18 cents per lb, after trading on both sides of unchanged, holding just above the prior session's three-month low of 17.96 cents.
Strong support was seen at 18 cents, traders said. Prime Minister Narendra Modi's party won a landslide victory in India's most important battleground state on Saturday, fuelling expectations the government may soon clarify whether it will import sugar later this year. The European Union, meanwhile, has approved a further 700,000 tonnes of out-of-quota sugar for export in the 2016/2017 marketing season. May white sugar settled up 70 cents, or 0.1 percent, at $513.10 per tonne.