ICE cocoa futures rose on Tuesday to a two-month high, as technically driven buying kicked in after prices breached a resistance level in the largest two-day rally since November. ICE arabica coffee slid and raw sugar inched up, both in heavy, range bound trading as they hovered near recent multi-year lows.
May cocoa on ICE Futures US gained $34, or 1.6 percent, to settle at $2,219 a tonne, after hitting $2,222 per tonne, the front month contract’s highest price since mid-February.
As prices approached technical resistance at $2,200 per tonne, automatic buy stop orders were triggered, sending cocoa higher, dealers said. Prices broke through that level on Tuesday following sharp gains the previous session.
Trading volumes were heavy, at more than 55,000 lots by 2:02 pm EDT (1802 GMT) compared with a 30-day average of fewer than 25,000 lots, preliminary Thomson Reuters data showed.
“It’s more of a technical break-out than anything. We’ve got some momentum (upward),” said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors. Prices jumped during a short-covering rally on Monday, with industry buyers supporting gains, dealers said. The steepest two-day rally in five months has taken cocoa up about 4 percent.
“There was tremendous underlying physical interest – manufacturer scale-down buying, which created support for the market,” Jonathan Parkman, joint head of agriculture at brokerage Marex Spectron, said of Monday’s rally.
Liffe July futures closed up 15 pounds, or 1 percent, at 1,486 pounds a tonne. Europe’s first-quarter 2013 grind volume, due to be published on April 17, is expected to be down by 1 to 5 percent from the same period in 2012 as excess grinding capacity globally keeps processing margins under pressure and demand stagnates.
May arabica coffee futures on ICE edged down 0.5 cent, or 0.4 percent, to close at $1.3540 per lb. During the previous session, they fell 3 percent, the front month contract’s largest one-day drop since early March. Trading volumes were heavy at over 69,000 contracts, compared with a 30-day average of fewer than 23,000 lots, preliminary Thomson Reuters data showed.
July robusta coffee futures on Liffe closed down $18, or 0.9 percent, at $2,037 a tonne.
May raw sugar futures on ICE inched up 0.02 cent, or 0.1 percent, to close at 17.72 cents a lb. More than 101,000 lots were traded, compared with the 30-day average of fewer than 89,000 contracts, according to preliminary Thomson Reuters data.
The front-month contract dipped to 17.47 cents last week, the lowest level since July 2010. May white sugar on Liffe fell $2.90, or 0.6 percent, to finish at $506.40 a tonne.