New York cocoa futures rose on Thursday, boosted by a weaker US dollar and options-related buying, while persistent fund selling drove arabica coffee to technically oversold levels at the lowest price in more than 4-1/2 years. September New York cocoa settled up $28, or 1.1 percent, at $2,482 per tonne after peaking at $2,529.
The weaker US dollar index and buying by system funds lent support, while buying related to August options also buoyed prices ahead of their expiry on Friday, with heavy open interest at $2,500, traders said. Market sentiment was upbeat, dealers said, with expectations for relatively positive grinding data from Europe, Asia and North America, due later this month.
September London cocoa settled up 15 pounds, or 0.8 percent, at 1,813 pounds per tonne. The July contract's premium over September surged to as high as 106 pounds, from 62 pounds the previous session, ahead of the spot contract's expiry on July 16. September arabica coffee settled down 2.75 cents, or 2.5 percent, at $1.0915 per lb, after sinking to $1.0855, the lowest since December 2013.
This pushed the second-position contract to around 22.6 on the 14-day relative strength index, the most technically oversold level since March 2015. Speculative selling pressured prices against a backdrop of forecasts for record output from top grower Brazil as well as expectations for a global surplus, traders said.
September robusta coffee settled down $50, or 3 percent, at $1,639 per tonne, the lowest since June 2016. October raw sugar settled up 0.09 cent, or 0.8 percent, at 11.48 cents per lb. October white sugar settled down $1.40, or 0.4 percent, at $330.20 per tonne.
The front-month premium over the second position strengthened to around $11.70, up from $9.50 the previous day, with open interest at a relatively heavy 23,199 lots as of Wednesday ahead of expiry on July 16, ICE data showed. Tighter supplies of sugar fitting the necessary criteria to be tendered, in spite of a broader global glut, supported prices, traders said.
"The question is what is available for delivery," one European dealer said. "And given the low, flat price environment, there aren't too many producers willing to let go of their sugar." The European Commission has cut its forecast for sugar production in the European Union in 2018/19 to 20.1 million tonnes from a previous projection of 20.4 million.