* Talk of generals defecting from Gbagbo drops cocoa
* Robusta coffee hits 3-yr top on tight supplies
* Sugar firm on supply crunch, steady demand (Updates with closing of all soft commodities, recasts with late cocoa selling spree on Gbagbo talk)
By Rene Pastor and David Brough
NEW YORK/LONDON, March 18 (Reuters) - Cocoa futures sank in a late selling spree on Friday on talk that Ivory Coast incumbent Laurent Gbagbo may be willing to step down and end a bitter power struggle in the world's leading producer of cocoa, analysts said.
Gbagbo and rival presidential claimant Alassane Ouattara, the internationally recognized winner of presidential polls last November, have been locked in a violent power struggle for control of a country that produces 40 percent of the world's cocoa beans. Cocoa exports have shriveled as a result.
New York's May cocoa contract slid $155 or by 4.7 percent to close at $3,127 per tonne, having dropped late in the session by 5.7 percent to a session low at $3,095.
London's Liffe May cocoa futures tumbled 123 pounds or by 5.8 percent to close at 2,003 pounds a tonne, having traded as low at 1,999 pounds.
"It looks like Gbagbo is looking to negotiate," Nick Gentile, chief of trading at commodity fund Atlantic Capital Advisors, said. "He's feeling the heat to get out of Dodge."
U.S.-based cocoa traders said talk hit both markets that "80 percent of Gbagbo's generals are switching sides", sparking a flurry of sales that hit automatic computer orders which sped up the fall of bean futures.
For the first time in weeks, the front cocoa contracts in London and New York which have been trading at a premium to the back months because of the Ivorian crisis turned into a discount on Friday.
At the close, New York's May/July spread showed a $4 discount and London showed a 5 pound discount.
SUGAR CLIMBS ON CASH BUYING, ROBUSTA ENDS DOWN
Sugar futures climbed as thin supplies and a revival in cash demand stoked the market higher. Robusta coffee hit a new 3-year high in London before ending lower on the day.
Investors were skittish going into the weekend because of unrest in the Middle East and that Japan's nuclear crisis may worsen over the weekend.
New York's May raw sugar contract on ICE Futures U.S. jumped 0.97 cent to end at 27.71 cents per lb. London's May white sugar futures soared $24.40 to close at $710.60 per tonne.
In coffee, London's May robusta futures hit a new 3-year high of $2,672 per tonne but declined $19 to end at $2,596 per tonne. New York's May arabica coffee contract though rose 5.30 cents to trade at $2.762 a lb.
A large chunk of buying has come from investors building long positions in softs to protect themselves in case the situation deterioiates in both the Middle East/North Africa and Japan, Gentile said.
"These markets digested all of the news ... and you have some bottom feeders jumping in," he said.
The premium of May robusta over July robusta backed away from the $200 per tonne hit on Thursday, but ended Friday at $160 which is an indication of how tight the deliverable supply situation is, dealers said.
(Graph: http://graphics.thomsonreuters.com/gfx1/RP_20111803115726.jpg)
Gentile said investors will focus later Friday on how much investment funds liquidated positions in the softs complex after the sharp sell-off sparked by the disasters in Japan earlier this week.
Posts
0 comments