New York cocoa futures set a new 8-1/2 month high on Thursday with a softer dollar giving added impetus to a run-up fuelled largely by a lower-than-expected crop in Ghana.
Robusta coffee futures also rose with the focus remaining on a widening premium for the July contract LRC-1=R, while raw sugar edged away from a 6-1/2 year low set earlier this week.
“It is currency-led today,” one London cocoa dealer said, adding an unexpected drop in production from number two grower Ghana remained the key bullish factor and currently appeared to be outweighing concerns about weak demand.
“It is a question of those two stories playing out. At the moment the specs don’t seem to care (about weak demand) given the situation in Ghana,” the dealer said.
Ghana has slashed its 2014/15 crop output target to 750,000 tonnes from an initial forecast of 1 million tonnes, blaming the drop on poor weather and disease outbreaks.
New York September cocoa was up $45 or 1.4 percent at $3,267 a tonne at 1136 GMT after peaking at $3,269, the highest level for the second month since late September 2014.
The dollar fell to a seven-month low against sterling on Thursday, providing support for prices denominated in the U.S. currency but weighing on the London market.
September London cocoa rose a modest 3 pounds or 0.1 percent to 2,134 pounds a tonne.
Robusta coffee futures were higher, with July’s premium to September LRC-1=R rising to more than $80. The front month had been trading at a discount until early this week.
Some owners of Brazilian conillon (robusta) coffee have sold into the rally this week but the premium may need to widen further to attract sufficient supplies if major longs maintain their positions, dealers said.
September robusta coffee was up $10 or 0.6 percent at $1,760 a tonne while September arabicas rose 1.45 cents or 1.1 percent to $1.3085 per lb.
Dealers said the current strength of robusta prices was holding up the arabica market.
“If it wasn’t for robusta, New York (arabicas) would be back in the 120s (cents a lb),” one dealer said.
The softer dollar also provided support for sugar prices.
July raw sugar was up 0.06 cents, or 0.5 percent, at 11.41 cents a lb. The front month has recovered slightly after setting a 6-1/2 year low of 11.30 cents earlier this week.
August white sugar was up $0.80 or 0.2 percent, at $346.20 a tonne.
Source: reuters
