Cocoa futures climbed to their highest in more than a year on Friday after Ivory Coast's incumbent leader decreed major banks suspending business in the top cocoa grower would be nationalised.
Arabica coffee was largely flat, just below the nearly 14-year peak touched earlier, with prices underpinned by further roaster buying, while raw sugar dipped ahead of Brazil's harvest but remained in a tight range.
Ivorian incumbent Laurent Gbagbo said the state would take control of all banks that had suspended operations in the West African state earlier this week, a move that turned the nation's post-election crisis into financial meltdown.
“If people can't withdraw money or pay money, it's going to have an effect on the cocoa farmers,” a broker in London said.
“It's a mess, and until they figure out who's in charge and it gets sorted, the market is going to stay steady.”
ICE benchmark May cocoa futures climbed $12 or 0.4 percent to $3,450 a tonne at 14:21 SA time in thin volume after earlier reaching $3,470, its highest since Jan. 21, 2010.
Liffe May cocoa was down 2 pounds or 0.1 percent at 2,230 pounds a tonne, below its six-month peak of 2,269, pressured by a 2-week high in the pound.
“Volumes are poor in both markets because people are too scared to do anything,” the dealer said.
Cocoa prices on ICE have rallied more than 20 percent since international sanctions and a cocoa export ban have tried to squeeze Gbagbo of funds and force him to stand down after a November 28 election the U.N. said he lost.
Some dealers said cocoa prices were overbought, as the sanctions and export ban caught only the tail end of the bumper harvest in Ivory Coast, which grows a third of the world's crop.
However, if Gbagbo remains in power and the cocoa export ban is extended past Feb. 23, hitting the mid-crop, more cocoa will be stranded in the country and start to rot at warehouses, analysts said, hurting the projected supply surplus.
“The stand-off ... has not much affected exports of the Ivory Coast's main crop, but the forthcoming mid crop could be a different matter,” ABN AMRO/VM Group said in a report on Friday.
COFFEE ROASTERS BUY
Arabica coffee prices inched up to their highest in almost 14 years, and robusta coffee hit a fresh 2-1/2-year peak, as limited supplies of quality beans since at least June 2010 have forced roasters to buy despite the high prices, dealers said.
“There's good buying coming in terms of what roasters are doing, and there's some hedging getting lifted,” a London-based trader said. “And with robusta so much cheaper (than arabicas), people want to extend their cover there.”
ICE May arabicas fell 0.35 cent or 0.2 percent at $2.6850 per lb at 14:24 SA time, after touching $2.70 a lb, their highest since May 1997.
Liffe May robusta coffee was up $29 or 1.3 percent at $2,334 per tonne after earlier rising to $2,358 a tonne, its highest since July 2008.
Arabica prices have been boosted by a third straight year of below-average harvests in Colombia, top producer of high-quality washed arabica beans, with robusta prices also lifted as some roasters substitute the cheaper bean into their blends.
Raw sugar futures fell further from the 30-year high hit earlier this month, trading in a tight range, as prices moves remained choppy and markets were pressured ahead of next month's harvest in top grower Brazil.
ICE March raw sugar was down 0.24 cent or 0.8 percent at 31.02 cents a lb at 14:24 SA time, below its 30-year high of 36.08 cents a lb from Feb. 2, while London May white sugar was down $6.60 at $720.10 per tonne.
“We failed again to break 32 cents yesterday and it seems the chart technicians' indicators are causing concern for the bulls,” Sucden Financial said in a market note on Friday.
New York commodity markets will be closed on Monday in observance of the U.S. President's holiday. - Reuters