July 3, 2014 / 8:40 PM / in 6 years

SOFTS-Cocoa hits 3-year high but ends down with coffee, sugar

* Strong demand for cocoa butter fuels rally in cocoa

* Weak exports seen in sugar exports (Recasts with U.S. trading session; changes byline, previous LONDON dateline)

By Barani Krishnan

NEW YORK, July 3 (Reuters) - Cocoa jumped near three-year highs in New York trading on Thursday but closed lower along with arabica coffee and raw sugar on light profit-taking and book squaring ahead of the Fourth of July holiday.

“It’s not unusual for people to put some money into the bank ahead of a long weekend and also clear some positions,” said Sterling Smith, futures specialist and softs markets commentator at Citigroup in Chicago.

The benchmark second month position for cocoa on ICE Futures U.S., September, settled down $11, or 0.4 percent, at $3,106 a tonne. The contract had earlier hit $3,149 — its highest since August 2011 on a continuation basis for the second month.

Cocoa has rebounded a near one-month low hit on June 25, reacting to higher demand for the cocoa butter raw product meant for chocolate making as candy makers projected better business from the global economic recovery.

The world’s largest chocolate maker Barry Callebaut reported volume growth in emerging markets of 18.2 percent on a stand-alone basis for the first nine months of 2013/14 in its results on Thursday.

Supply-demand in global cocoa was also almost at parity in 2013/14, traders said.

Yet some think the market may have trouble breaking above $3,200 a tonne as demand for cocoa powder, the other raw material from the commodity which is used in baking and ice cream-and-confection making, has not been as good as sales of cocoa butter.

“The cookie makers and ice cream makers had put in a great deal of coverage for powder in earlier months, and the powder market is very depressed at around $1,860 a tonne,” Smith said.

In London, September cocoa on Liffee closed down 4 pounds at 1,927 pounds a tonne.

Liffe’s front-month July contract held a 27 pound per tonne premium to September LCC-1=R, with dealers attributing the difference to noting historically low certified stocks.

For sugar, traders noted slow activity on the physical market.

“Thailand is way behind on its intended shipments; the market just hasn’t really wanted it, the result is there’s quite a lot of sugar there that’s ready to export,” said James Kirkup, head of sugar brokerage at ABN AMRO in London.

In raw sugar, the most-active front-month U.S. contract on ICE, October, settled down 0.6 cent at 17.81 cents a lb.

London’s white sugar for August fell in early trading before rising on late buying to close up $2.60 at $470.10 a tonne.

In arabica coffee, ICE’s September contract finished down 2.0 cents, or 1.2 percent, at $1.7180 per lb.

Liffe’s September robusta coffee rose $21, or 1.1 percent, to $2,068 per tonne. (Additional reporting by Sarah McFarlane; Editing by William Hardy and David Gregorio)

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