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  • May 16th, 2017
  • Comments Off on Cocoa at five-week top on Ivory Coast conflict; sugar firms
Cocoa futures on ICE extended a rally to five-week highs on Monday, as a four-day army mutiny in top producer Ivory Coast triggered a wave of short-covering, dealers said. Raw sugar futures were also higher, boosted by broad-based strength in commodity markets as the 19-market Thomson Reuters CoreCommodity Index rallied for the fourth straight session.

July London cocoa settled up 21 pounds, or 1.3 percent, at 1,590 pounds per tonne after climbing to 1,638 pounds, the highest for the benchmark second position since April 7. July New York cocoa settled up $26, or 1.3 percent, at $2,041 per tonne, after rising to $2,066, the highest on a continuation chart since April 6.

Gunfire rocked cities in Ivory Coast on Monday as a mutiny by disgruntled soldiers gathered pace in defiance of government action against a revolt that threatens the country's rapid emergence from a civil war. "It (the rise) is all on Ivory Coast and the size of the short positions in both London and New York," one dealer said, noting that speculators were covering substantial short positions in both markets.

"For sure this situation would make a short nervous; (it is) risky to sell in advance of an agreement. But once they reach a real agreement, there is a lot of air underneath," one US trader said. Dealers said buy-stops were triggered in early trade, helping the market surge to session highs. But prices fell back once the initial buying spree subsided. July raw sugar settled up 0.1 cent, or 0.6 percent, at 15.61 cents per lb.

"Raws are going up on the back of the commodity basket. Oil is the main leader and everything else has followed," one dealer said. August white sugar settled down $2.90, or 0.7 percent, at $439.10 per tonne, leading to a sharp fall in the white sugar premium over raws to a three-month low. July robusta coffee settled down $25, or 1.3 percent, at $1,969 per tonne. July arabica coffee settled down 1.5 cents, or 1.1 percent, at $1.3345 per lb.

"The market wants to talk about good production and ample supplies down the road as reasons to keep the selling pressure alive. However, the softer US dollar and higher South American currencies keep offers into the world market small," said Jack Scoville, vice president with Price Futures Group in Chicago.



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