Liffe Cocoa Hovers Near Recent Highs; Coffee Consolidates

Neena Rai

  LONDON - Cocoa futures Wednesday traded in sight of the more than two-year

high hit in the prior trading session, as stronger-than-expected demand for the

chocolate making ingredient and the anticipation of a global deficit supported

the market.

  March cocoa futures edged 0.4% lower to GBP1,762 a metric ton. In the prior

session, futures hit GBP1,774 a ton-- the highest level since Sept. 30, 2011.

  "Cocoa futures achieved a two-year high due to concerns about the harvest in

Ivory Coast, top grower of cocoa," Phillip Futures said. "The wet weather in

Ivory Coast was hampering the harvesting of cocoa and this could support a

prolonged global deficit.

  "Traders are now waiting for the North American third quarter grind data

which was expected to increase from the previous year, indicating an

improvement in cocoa demand. With supply concerns as well as expectations of

improved demand, we remain bullish on cocoa," the brokerage said.

  January robusta coffee futures nudged up 0.5% to $1,680 a ton, as the market

consolidated from the previous session's losses when trading stops were

triggered.

  "While Vietnamese premiums continue to be high for current product, there

have been few if any takers as roasters continue to wait for new crop

supplies," said Sterling Smith, futures specialist at Citi.

  Elsewhere, European Union wheat futures traded slightly lower for November

delivery at EUR199 a ton.

  "Grain markets were mixed overnight, with corn rallying 1.5% but wheat fell

1%," said ANZ Bank. "Corresponding overnight price moves for corn and wheat

look to be driven by relative value - with the market deciding the price

premium wheat has built over corn in the past month is enough.

  "In the past week, December wheat futures have hit a USD80/ton premium to

December corn, with the premium increasing by USD25/t in the past month alone.

Wheat prices now look fully valued relative to corn, and unless corn can rally

significantly (which is unlikely), wheat prices look set to struggle

near-term," warned the bank.

  Meanwhile, Liffe sugar futures for December delivery were steady at $499.40 a

ton.