* Cocoa reels from fund long liquidation, sell stops
* Trade awaits delivery in expiring May raw sugar contract
(Recasts, changes dateline, pvs LONDON, adds byline)
By Rene Pastor and Naomi O’Leary
NEW YORK/LONDON, April 30 (Reuters) – Cocoa futures on ICE
crumbled on Monday in a wave of month-end technical sales, which
also touched off automatic computer sell orders in heavy volume,
and analysts see little let up in the pressure in coming days.
“The computer hit a (sell) stop and for about 10 minutes,
there were no buyers in the room,” said Country Hedging Inc
analyst Sterling Smith.
ICE July cocoa futures dropped $90 or 3.39 percent,
to close at $2,219 per tonne, having been down more than 7
percent when it hit a session low of $2,146.
July cocoa on Liffe fell 38 pounds or almost 2.5
percent to end at 1,493 pounds a tonne.
“We hit resistance about (the) $2,300 level, basis July. The
buying just disappeared and we saw long liquidation,” said Boyd
Cruel, softs analyst for Vision Financial Markets in Chicago.
“There were no buy-stops up there.”
The market dropped sharply but did not trigger the circuit
breaker which only comes into effect if the market moves 100
points within 15 seconds, an ICE spokesman said.
“When everything dried up, prices just started moving lower
and we saw liquidation come in,” Cruel said.
The benchmark July futures contract fell through the
technically important 100-day moving average at $2,279.
(Graphic on cocoa prices: http://link.reuters.com/vav87s)
The traders said a large number of sell orders kicked in
around the $2,250 area, accelerating the decline in values.
SUGAR MAY EXPIRY EYED, COFFEE MIXED
Raw sugar futures consolidated while players awaited May
expiry at the close of trade to see how much sugar will
be delivered when the contract goes off the board. Most expect
that a large delivery is not in the cards.
Open interest in the May contract stood at 18,500 lots or
939,843 tonnes as of last Friday.
“Today’s expiry is expected to see a small delivery, with
the May/July spread having come into around flat, suggesting
there’s limited interest in taking delivery from the exchange,”
said Peter de Klerk, an analyst at sugar merchant Czarnikow.
ICE May raws climbed 0.15 cent to trade at 21.37
cents per lb and most-active July gained 0.16 cent to
trade at 21.37 cents as well.
Smith said the disposition of May’s open interest will only
take place, as usual, in the last half-hour of trade. The market
ends trading at 1:30 p.m. EDT.
London August white sugar futures rose $3.50 to
trade at $580.30 per tonne.
Dealers said sugar prices are nearing parity with ethanol,
which should help support the sugar market if cane is diverted
into ethanol production.
“If at some point the sugar price is lousy as a return on
the world market, people will swing as much as they can to
ethanol, diminishing the supply of sugar,” said Pierre Sebag,
founder of consultancy Sugar K Ltd.
Coffee futures were mixed. Arabicas moved up although market
sources said the market should shift into surplus in the coming
months which would cap future gains.
All eyes will be on top producer Brazil’s weather reports in
the coming weeks, given the threat that frost could harm coffee
crops is most acute from the end of May through to August.
“Speculators have built a large short position, and any news
regarding Brazil’s winter can potentially create a
short-covering rally if they hold this position,” said the
analyst.
July arabicas on ICE rose 1.95 cents or 1.1 percent
to trade at $1.7845 per lb at 12:12 p.m. Benchmark Liffe July
robusta coffee futures dropped $18 to trade at $1,978 a
tonne.
(Additional reporting by Sarah McFarlane in London and Marcy
Nicholson in New York; Editing by William Hardy and Alden
Bentley)
