A strong demand outlook boosted cocoa to a close three-year high on Monday. Dealers remained concerned with the damage done to crops by a recent drought in Brazil, the world's top grower, causing ICE U.S. coffee futures to steady in light volumes on Wednesday.
Benchmark ICE December cocoa futures were down $14, or 0.4 percent, at $3,224 per ton, slightly under Tuesday's session high at $3,244, the highest level since late July 2011.
Kash Kamal, research analyst with Sucden Financial, said, "Further gains on the upside could set the stage for a breakout above $3,240 before attempting to target levels towards $3,250," according to Reuters.
December cocoa futures on Liffe were up 4 pounds, or 0.2 percent, trading at 2,017 pounds per ton in moderate volume of 1,618 lots. Liffe November robusta futures climbed $5, or 0.3 percent, at $1,981 a ton in light volume of 946 lots, reports The Business Recorder.
Dealers say that they expect prices to stay capricious as uncertainty remains over the health and size of Brazil's current crop. After two months of holding a premium, September spreading was at a $10 discount to December from a $2 discount on Monday.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.