Cocoa futures on ICE rose on Friday after tapping multi-week lows, as funds traded both sides of the market amid West African mid-crop pressure and signs of increasing demand. Raw sugar also gained, on worries about dry weather in Brazil. July New York cocoa settled up $39, or 1.5 percent, at $2,678 per tonne, after dropping to $2,615, its weakest since April 16.
"The market itself has been dealing with a couple of different fundamentals. We're getting the (West African) mid-crop right now, and that's what's giving us some selling pressure," said Jack Scoville, vice president with Price Futures Group in Chicago. "On the other hand, people want to stay bullish because demand seems to be improving," Scoville said.
Prices remained within sight of a 1-1/2-year high reached on May 1 after rallying more than 50 percent this year so far, leaving some market participants who focus on fundamentals perplexed due to sufficient global supplies. "The market has been well bid below $2,700 in recent sessions and this could prompt a reversal back to $2,800," said Sucden Financial technical analyst Geordie Wilkes in a note.
July London cocoa settled up 26 pounds, or 1.4 percent, at 1,882 pounds per tonne, after falling to the lowest since April 26 at 1,840 pounds. July raw sugar settled up 0.1 cent, or 0.9 percent, at 11.66 cents per lb. The spot contract was pressured earlier by the Brazilian real currency, which fell to its weakest against the US dollar since March 2016.
"Investors do seem to be buying still, and that took prices up to new near-term highs," said Commonwealth Bank of Australia analyst Tobin Gorey. "And that buying is unlikely to be exhausted as yet." Worries about dry conditions in top grower Brazil also supported prices, causing some to lower their production expectations there, while low prices have inspired mills to allocate more cane to ethanol.
However, a glut of global supplies, mainly owing to strong production in Thailand and India, is widely expected to offset the decline in Brazilian output. August white sugar settled up $3.50, or 1.1 percent, at $330.20 per tonne. July robusta coffee settled up $12, or 0.7 percent, at $1,762 per tonne. Speculators increased their net short position by 10,211 lots to 14,015 lots in the week ended May 15, exchange data showed. July arabica coffee settled up 0.1 cent, or 0.1 percent, at $1.18 per lb.