Coffee, cocoa rise on rollover business

LONDON - Cocoa and coffee futures rose on light rollover business on Tuesday as participants squared positions before the end of the year, while sugar remained stuck in a range in thin volumes underpinned by a weak dollar.

By (Reuters)

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Published: Tue 30 Dec 2008, 8:55 PM

Last updated: Sun 5 Apr 2015, 12:17 PM

"Structure (rollover business) is padding out the volumes," one London cocoa dealer said.

Robusta coffee dealings were subdued in routine business due to an absence of fundamental news to drive the market, dealers said.

London March robustas were up $21 or 1.35 percent to $1,578 per tonne in slim, holiday-thinned volume of 358 lots, while ICE March arabicas were up 0.55 cent to $1.0720 per lb at 1205 GMT.

In the London cocoa futures market, traders also talked of switch activity, and noted light origin selling as prices were not too far off last week's (December 23) 23-year peak, basis second month, of 1,820 pounds per tonne.

"There might also be a bit of profit-taking (from the highs)," one dealer said.

Cocoa market fundamentals are tight with traders closely watching the slow arrivals of beans to the ports in top producer Ivory Coast, noting that the pace had picked up lately.

"If arrivals continue to arrive at a steady pace, this will weigh on the market," a London trader said.

The weak pound was also supporting London cocoa futures prices, dealers said, noting support in London May at 1,740 pounds and nearby resistance at 1,800.

May was up 12 pounds or 0.7 percent to 1,767 pounds per tonne in low turnover of 206 lots at 1208 GMT.

In sugar, trading volumes were light on two-way investor dealings buoyed by the weak dollar, dealers said.

"Dollar weakness is mildly constructive," said Nick Hungate, a soft commodities trader with Rabobank.

The dollar fell against the euro and a basket of currencies on Tuesday as traders closed out some positions before the year-end and ahead of data on the U.S. housing market and consumer confidence later in the day.

Sugar dealers said near-term price risk was to the downside as fund allocations were expected to shift out of sugar, although benchmark raw sugar is currently caught in a 10.5-11.5 cents per lb range.

But in the longer term, tightening supplies of the sweetener were expected to push prices higher.

ICE March sugar was up 0.06 cent or 0.5 percent to 11.18 cents per lb at 1220 GMT, while London March white sugar was up 50 cents to $313.00 per tonne.

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