Forex Brokers

Trading Tools

Crosses

UPDATE 2-SOFTS-Cocoa rises on tight supplies, sugar lower

2008-11-18 16:43:21 GMT (Reuters)

votes

View Comments (0)

Previous News | Next News

	Text Size
	Print
	Email
	Add a Comment

* Vietnam coffee harvest resumes after storms

* Nearby supply tightness helps drive advance in cocoa

By Nigel Hunt

LONDON, Nov 18 (Reuters) - Cocoa prices rose on Tuesday, boosted by concern about short-term supply tightness while raw sugar eased, tracking losses in some other commodities linked to the gloomy economic outlook, dealers said.

Dealers said the slow pace of arrivals at ports in top cocoa producer Ivory Coast, combined with some options-related buying, had triggered a sharp rise in the nearby premium this week and created a more bullish mood in the market.

Benchmark March cocoa stood 39 pounds higher at 1,399 pounds a tonne at 1613 GMT while March cocoa on ICE was $60 higher at $2,037 a tonne.

December's premium to March in London was trading around 60 pounds on Tuesday, sharply up from about three pounds on Friday.

"People got a bit spooked (by the rising premium)," one dealer said, adding concern about nearby tightness had prompted short covering by both London and New York.

Raw sugar eased with the gloomy economic outlook keeping the market on the defensive although early losses had been trimmed.

"I think we are following outside markets, that is all. There is no physical news," one sugar dealer said.

ICE March raw sugar was down 0.14 cent or 1.2 percent to 11.60 cents, while March whites were unchanged at $322.90 a tonne.

Dealers said sugar may consolidate in the short term between $310 and $320, basis March whites, but the grim economic outlook may eventually drive prices down further.

Ethiopia bought white sugar at a tender late last week for $380.00 per tonne, cost and freight, trade sources said.

Estimates for the size of the purchase ranged from 42,000 to 53,000 tonnes. The sugar is expected to be delivered in the first quarter of next year.

Arabica coffee futures were mostly higher as the market extended a late rebound on Monday after sharp losses earlier in the day when origin selling helped to trigger sell-stops.

Coffee farmers in Vietnam, the world's second largest producer, resumed harvesting on Tuesday after a 2-day disruption caused by rains from tropical storm Noul, traders said.

March arabica futures on ICE were up 0.05 cent at $1.1475 per lb after trading as low as $1.1060 on Monday.

January robustas in London were off $6 at $1,819 a tonne in very heavy volume of 28,503 lots.

Dealers noted a large 25,000 lot trade on January which may have been linked to removing coffee from the 5-tonne contract with positions possibly to be reestablished in the 10-tonne market. January is the last traded month on a 5-tonne basis.

Vietnam coffee shipments should rise nine percent to 1.2 million tonnes in 2009, a report from the country's Industry and Trade Ministry said. (Editing by David Evans)

Content Provided by

Reuters
Reuters is the largest international news agency -- providing professionals around the world with stories that move the markets.

Disclaimer:
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.