July 13, 2016 / 12:02 PM / 4 years ago

SOFTS-Cocoa prices rise as supply outlook tightens

* London cocoa sees nearby premiums strengthen
    * New York cocoa filling chart gap opened after Brexit vote
    * Sugar weighed by favourable harvest conditions in Brazil

    By Nigel Hunt
    LONDON, July 13 (Reuters) - Cocoa futures rose on Wednesday
with the market underpinned by tightening supplies following a
poor mid-crop in top grower Ivory Coast and the prospect of a
slow start to the main crop later this year.
    Dealers noted the tightening supply outlook was reflected in
the London cocoa market's structure with nearby contracts
trading at substantial premiums to further forward positions.
    "The ongoing dry weather and potential slow start to the new
crop is reflected in the strong spreads, especially what is
going on in July/Sep," one London dealer said.
    The July contract, which expires on Thursday, was
indicated at a premium of as much as 87 pounds to September
after a steady rise in recent weeks.
    Persistent cool weather in some of Ivory Coast's main cocoa
growing regions could hurt output during the start of the
forthcoming main crop, farmers said on Monday. 
    Weather in July and August is crucial to determining the
size of the October-to-March cocoa main crop. Farmers said
prolonged cloudy and cool weather could prevent cocoa trees from
reaching their full potential.
    September New York cocoa was up $25 or 0.8 percent at
$3,139 a tonne at 1143 GMT as it continued to fill a chart gap
created when the market opened sharply lower on June 24.
    "We delved into the gap which was created on the day after
the (EU) referendum. It is on a mission now to fill that gap,"
the London dealer said.
    Dealers said second quarter North America grind data on
Thursday would also provide a short-term focus. Dealers are
estimating a roughly 5 percent rise, which would mark the first
year-over-year gain in seven quarters.
    September London cocoa rose 16 pounds or 2,484
pounds a tonne.
    Raw sugar futures were lower with the market weighed by the
fast current pace of cane crushing in top producer Brazil.
    "Harvest conditions remain largely favourable in
centre-south Brazil cane regions," analyst Madeleine Donlan of
Commonwealth Bank of Australia said in a market note, adding the
front month's discount had been widening.
    Brazil sugarcane industry association UNICA is expected to
issue an update on cane crushing in the second half of June
early next week.
    October raw sugar on ICE was off 0.16 cent or 0.8
percent at 19.56 cents a lb after earlier touching 19.37 cents,
its weakest level in more than two weeks.
    August white sugar, which expires on Friday, was off
$6.40 or 1.2 percent at $536.80 per tonne.
    Coffee prices were marginally lower with September arabica
 off 0.1 percent at $1.4730 per lb and September robusta
 down 0.3 percent at $1,803 per tonne.

 (Editing by Keith Weir)
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