February 12, 2014 / 9:01 PM / in 4 years

COMMODITIES-Cocoa at 2-1/2-year peak as softs rally; metals up

By Barani Krishnan
    NEW YORK, Feb 12 (Reuters) - The softs complex dominated
gains in commodities markets on Wednesday as cocoa hit
2-1/2-year highs while raw sugar and arabica coffee rallied on
factors ranging from bullish crop weather to an India government
subsidy and investor speculation.
    Base metals also advanced strongly, with nickel,
aluminium and copper prices all rising by more
than 1 percent after top metals buyer China unveiled record
imports data for January. A debt limit deal reached by the U.S.
Congress and market-friendly comments this week from the Federal
Reserve's new chief also supported metals. 
    Crude oil, gasoline and gold gained
slightly to join commodities in the positive territory. 
    Only a few commodities markets closed lower, including wheat
, which saw profit-taking after Monday's run higher on
worries about tightening supply. 
    The Thomson Reuters/Core Commodity Index settled
half a percent higher for a second straight day. Thirteen of the
19 markets tracked by the commodities bellwether ended higher.
    Cocoa futures in New York and London hit 2-1/2-year highs on
worries that potential El Niño weather conditions could curb
global cocoa output.
    The Australian weather bureau and the Climate Prediction
Center (CPC), a U.S. weather forecaster, have said there is an
increasing chance of an El Niño weather pattern emerging later
this year. 
    El Niño can cause flooding and heavy rains in the United
States and South America and drought in Southeast Asia and
    "During El Niño years, global production is lower than it
would otherwise be," said Jonathan Parkman, joint head of
agriculture at brokerage Marex Spectron.
    Parkman said the emergence of the weather pattern early this
spring could affect the current 2013-14 crop as well as
plantings in the next season.
    The benchmark second-month cocoa futures contract in New
York, May, gained $43, or 1.3 percent, to settle at
$2,971 a tonne. It hit a 2-1/2-year high of $2,974 during the
    In London, May cocoa closed up 13 pounds, or 0.7
percent, at 1,867 pounds a tonne. The session high was 1,871
pounds, the month's highest since September 2011.
    Raw sugar prices jumped after India's government agreed to
give millers a production subsidy that could reduce output from
the world's second-largest sugar producer. New York's
most-active raw sugar contract, March, closed at 15.81
cents per lb, up 0.35 cent, or 2.3 percent, for its sharpest
daily gain for this month.
    Arabica coffee rallied as traders covered short positions
ahead of options expiry, said Hector Galvan, senior softs broker
at RJO Futures in Chicago.
    Prices also found support from worries that dry conditions
in Brazil have hurt coffee crops. MDA Weather Services said on
Wednesday that dryness remains a "major concern" in Brazil's
coffee regions.
    Arabica coffee's May contract in New York closed up
3.7 cents, or 2.7 percent, at $1.4315 per lb. 

 (Editing by G Crosse)
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