Cocoa prices in London up on instability fears in Ivory Coast
London cocoa futures rose on Monday, buoyed by political instability in top producer Ivory Coast, while sugar and robusta coffee eased in thin volumes.
U.S. markets were shut for President’s Day.
Police used tear gas to disperse hundreds of anti-government protesters in eastern Ivory Coast on Monday, paralyzing the city of Abengourou and forcing several cocoa warehouses to close in the world’s largest supplier.
The unrest in Ivory Coast was of concern to the cocoa futures market mainly because of worries it could force workers to quit cocoa farms, eroding mid-crop output, said Eric Sivry, director and head of cocoa brokerage at Fortis Bank Nederland.
“If the level of political instability increases, people will be pulled away from the farms,” he said.
Ivory Coast’s main opposition groups said they no longer recognised Laurent Gbagbo as president of the country on Saturday after he dissolved the government and electoral commission.
Cocoa arrivals at export ports in Ivory Coast are running more than 10 percent ahead of last year, but exporters worry political turmoil could slow the pace of arrivals in the coming weeks.
Dealers said the latest developments suggested elections were unlikely to take place soon.
Cocoa flows to ports are tailing off as the Ivorian main crop wraps up, so while political instability could delay cocoa flows, it was unlikely to halt them, dealers said.
London (Liffe) May cocoa futures ended 17 pounds or 0.8 percent higher at 2,278 pounds a tonne.
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London white sugar futures were marginally lower in slim volumes in the absence of the New York market.
“We’re just marking time,” said Nick Hungate, a soft commodities trader with Rabobank.
A total of 2,342 lots (117,100 tonnes) of white sugar were tendered against the March contract which expired on Friday, NYSE Liffe said on Monday.
Dealers were divided over the sugar market outlook, as futures prices consolidated below recent 29-year highs in raws driven by tight global supplies and robust demand.
Some dealers said the market was waiting to challenge fresh peaks soon because of the low availability of supply, while others suggested that a large supply response by growers would put prices under pressure later in the year.
“The bulls will point to the recent set of generally higher lows and resurgence since the collapse on February 5,” broker Sucden said in a daily report. “The bears will be highlighting the failure to break through 28 cents, a key level that has provided support and now resistance.”
Dealers noted that Friday’s report from the U.S. Commodity Futures Trading Commission (CFTC) showed a significant decline in the non-commercial (speculative) position during the sharp setback in raw sugar prices earlier this month.
“In sugar, the 7.7 percent decline in prices seen between February 4 and February 9 coincided with a decline of nearly 40,000 contracts in the net non-commercial position,” Rabobank said in a report issued on Monday.
Liffe May white sugar ended $0.20 lower at $735.80 per tonne.
Robusta coffee futures edged lower, although liquidity was drained by the U.S. holiday.
Dealers talked of ample nearby supplies, and said the market was likely to remain in its current trading range for now.
“Coffee is very much macro-driven – often shifting in correlation with the dollar,” one London dealer said.
London (Liffe) May robustas settled $11 lower at $1,318 per tonne with the market hovering just above a contract low of $1,310 set earlier this month.
Source: Reuters