March 20, 2012 / 5:22 PM / 5 years ago

SOFTS-Cocoa surges, sugar stalls after hitting 3-wk high

* Low quality beans stoke advance in cocoa values
    * Sugar rally capped by producer sales
    * Coffee trade braces for big Brazilian harvest

 (Adds closing prices for sugar and coffee, adds NEW YORK to
dateline.)	
    By Rene Pastor and David Brough	
    NEW YORK/LONDON, March 20 (Reuters) - Cocoa futures jumped
on Tuesday as concerns about poor quality beans in top grower
Ivory Coast spurred a wave of short-covering in the New York and
London markets. 	
    Raw sugar marched to a three-week top, but then stalled on
producer sales while coffee edged quietly higher. 	
    New York's May cocoa contract soared $83, or 3.6
percent, to settle at $2,372 a tonne.	
    The May contract climbed above the 40-day moving
average at $2,333 and then found resistance around the 100-day
moving average at $2,350.	
    London's May cocoa futures on Liffe went up 42
pounds, or nearly 3 percent, to end at 1,519 pounds per tonne.	
    "There are small beans at the tail end of the midcrop," said
Drew Geraghty, commodity broker at ICAP North America in New
Jersey.	
    Exporters in Ivory Coast said on Monday they were concerned
by the rise in the level of Free Fatty Acids (FFA) in the cocoa
arriving at the ports there because of the small size and poor
quality of beans as a result of a four-month
drought. 	
    "I think that's what stirred the market here. The rally has
really been a short-covering event spurred by the tail end of
the crop here," Geraghty said.	
    	
    SUGAR RALLY LOSES STEAM, COFFEE UP	
    Sugar futures sputtered after the raws market touched a
3-week high as producer selling stepped up.	
    May raw sugar on ICE eased 0.05 cent to finish at 
25.61 cents per lb, having touched a three-week top of 26.20
cents. London May white sugar futures dropped $2.30 to
end at $665.70 per tonne.	
    James Cordier, senior analyst at brokerage Optionsellers.com
in Florida, said sugar was a bit overbought so it came off.	
    But talk of potentially lower-than-expected production in
the premiere center-south region of top producer Brazil limited
the downside.	
    "The current rally does show that funds are reluctant to buy
into the surplus story and are betting that the problems seen
during Brazil's last harvest will be repeated," said Nick Penney
of Sucden Financial.	
    "The producers worry that yields may not be as high as
previously expected and further dry weather will exacerbate the
problem, even if sucrose content improves," he added.	
    The market was also supported by talk of ongoing dryness in
the Brazil's center-south. 	
    "The market is starting to build a bit of a weather premium
into the price," said James Kirkup, head of sugar brokerage at
ABN AMRO Markets.	
    The state-run Thai Cane and Sugar Corp (TCSC) will issue a
tender next week to sell 79,333 tonnes of raw sugar from the
next 2012/13 crop, a senior official said on Tuesday.
 	
    A ministers' panel will review India's sugar exports on
March 26, a government source said on Tuesday, raising
expectations of more overseas sales of the sweetener from the
world's second-biggest producer, which could pressure global
prices. 	
    Arabica coffee futures on ICE were little changed as they
remained rangebound after tumbling to a 17-month low early last
week. "You're probably finding roaster support," Geraghty said.	
    May arabicas on ICE went up 0.10 cent to close at
$1.836 per lb. Liffe May robusta coffee futures 
increased $8 to end at $2,032 a tonne.	
    Expectations of a big Brazilian crop and the prospect of a
global surplus in 2012/13 had diminished investor appetite for
the commodity, dealers said.	
    "Robusta prices should ease next month as the erstwhile
disciplined Vietnamese producers decide to release their
abundant crop to the market ahead of the Indonesian and
Brazilian harvests," Macquarie said in a report on Tuesday.	
    Dealers noted weekly exchange data showed speculators have
been increasing their net long position in robusta coffee on
Liffe while expanding a net short in ICE arabica coffee.
 .	
    "Evidently, money managers currently anticipate a further
narrowing of the price differential between the two coffee
types," Commerzbank said in a market note on Tuesday.	
	
 (Additional reporting by Marcy Nicholson in New York and
Michelle Martin in London; Editing by Bob Burgdorfer)

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