-Trade awaits ICE July raw sugar expiry on Thursday

-Concerns over quality of new crop arabica beans in Brazil

LONDON: Sterling-based London cocoa futures on ICE touched a fresh 5-year high on Monday, buoyed by a slide in the pound to a 31-year low in the wake of Britain’s vote to leave the EU.

Raw sugar futures firmed, with traders focused on expiry of the July futures contract on Thursday.

Coffee dipped, pressured by a stronger dollar, with dealers expressing concerns over the quality of the new arabica crop in top grower Brazil.

The plunging pound supported London cocoa prices as it made it cheaper for holders of non-UK currencies to buy sterling-based cocoa futures positions.

New York cocoa, in turn, fell as the two markets adjusted to each other.

“The weakening pound, making sterling cheaper in foreign currency terms, is lifting London cocoa,” one broker said.

“Sell New York, buy London: you are seeing a natural adjustment going on between the two markets through arbitrage. Fundamentals are very much secondary at this point.”

British 10-year government borrowing costs dropped below 1 percent on Monday for the first time ever and sterling tumbled to a fresh 31-year low against the dollar as investors bet Britain’s vote to leave the EU on June 23 will trigger a Bank of England rate cut.

London September cocoa was up 38 pounds, or 1.6 percent, at 2,363 pounds per tonne at 1307 GMT, a contract high and the highest for the second position since March 2011.

New York September cocoa was down $28, or 0.9 percent, at $2,995 per tonne.

Raw sugar futures rose on technically driven buying, but dealers warned of risks of a selloff after the latest US Commitments of Traders report on Friday revealed the extension of a net long position held by speculators to a new record.

“The market is overextended to the long side by historic comparisons,” said James Kirkup, head of sugar at ABN AMRO Markets.

“We are seeing consolidation after the recent move to 20 cents per lb.”

Nick Penney, a senior trader with Sucden Finnancial Sugar, said, “The speculative community is comfortable being long and the pressure is still very much on the shorts as the long expected setback fails to materialise.”

October raw sugar was up 0.24 cent, or 1.25 percent, at 19.40 cents per lb.

August white sugar was up $3.30, or 0.6 percent, at $535.20 per tonne.

September arabica was down 0.25 cents, or 0.2 percent, at $1.3690 per lb.

September robusta was down $12, or 0.7 percent, at $1,657 per tonne.—Reuters