Cocoa futures rose sharply Tuesday on news reports that a huge chunk of the cocoa crop in the Ivory Coast, the world's largest grower, had already been sold forward.
Cocoa for July rose 6.6% to end at $2,037 a ton on the ICE Futures U.S. exchange, the largest one-day percentage increase for cocoa since Jan. 10, 2012.
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Jack Scoville, vice president of Price Futures Group in Chicago said the move came on the back of news that 950,000 tons of Ivory Coast's still unharvested cocoa crop had already been sold to buyers. That would be just under the size of Ivory Coast's entire cocoa crops last year.
"The vast majority of the hedging pressure you might see for the next year or so is probably already done," he said.
Traders said short-positioned traders bought futures to cover their bets as prices began to rise.
Shipments of bean in Ivory Coast, the world's largest growing region, have been up 22% on year since the season started in October, according to Commerzbank, but may decline during the wet season, which still has several weeks to go.
"Farmers are praying for sufficient sunshine to ensure that the current mid-crop is as good as hoped," the firm said.
Data released earlier in the day by ICE and Rabobank showed that traders in both London and New York were raising long positions on cocoa. Tuesday's move is a continuation of a rally which started Friday after selloffs earlier in the week.
Managed money raised its bets for the third consecutive week that London cocoa prices would continue to rise, according to market data released by ICE. In the week to May 23, the net-short position decreased by 95%.
In other markets, raw sugar for July lost 0.9% to 14.92 cents a pound, arabica coffee for July was up 1.1% at $1.3275 a pound, frozen concentrated orange juice for July lost 1.6% to $1.3645 a pound, and July cotton rose 0.4% to 77.38 cents a pound.
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May 30, 2017 18:53 ET (22:53 GMT)