Cocoa rises from multi-year lows, sugar consolidating

Cocoa futures prices were boosted on Monday by news that speculators had increased further an already large short position, prompting some to expect there may be scope for a short-term rebound in prices. May New York cocoa was up $51, or 0.85 percent, at $2,257 a tonne at 1500 GMT. The second position has recovered some ground after dipping to a low of $2,144 a week ago, its weakest since July 2013.

Speculators boosted bearish bets on cocoa to a 4-1/2 year high in the week to Dec. 13, US Commodity Futures Trading Commission data showed on Friday. Dealers said the scope for further losses may also be limited after a prolonged slide, with the market on course to fall nearly 30 percent in 2016.

The decline has been driven by forecasts of a global surplus in 2016/17 and the strong current pace of port arrivals in top producer Ivory Coast. Good weather with a mild Harmattan wind and scattered rainfall should lead to an ample main crop in Ivory Coast, farmers said on Monday. The dry dusty wind from the Sahara was particularly strong last year, damaging bean quality.

“It feels as though a lot of the move has happened. The story of (global) surplus, of good arrivals, is the reason we are where we are,” one dealer said. May London cocoa was up 37 pounds, or 2 percent, at 1,861 pounds a tonne. Raw sugar futures were nearly flat, consolidating ahead of the holiday season, despite a decidedly bearish outlook.

March raw sugar futures were up 0.02 cents, or 0.1 percent, at 18.24 cents a pound. Sugar prices have plummeted as funds have reduced their net long position by almost 200,000 lots in the past two months. Raw and white sugar futures hit six-month lows last week. “Today might be a correction of last week’s movements,” analyst Michaela Kuhl at Commerzbank said. “But we think prices will not recover markedly – the main reason being that we will not see a deficit next season.”

Forecasts of a small global sugar surplus next year, and a depreciating Brazilian real, have driven prices down. Speculators cut their net long position in sugar again in the week to Dec. 13, to their smallest bullish bet since April, US CFTC data showed on Friday. “We anticipate a period of consolidation but don’t discount further liquidation ahead of the New Year and the financial year end,” Nick Penney, senior trader at Sucden, said in a note. March white sugar futures were down $0.6, or 0.12 percent, at $491.90 per tonne. March robusta was up $8, or 0.38 percent, at $2,091 a tonne. March arabica coffee rose 0.85 cent, or 0.5 percent, to $1.4320 per lb.


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