Last week cocoa prices rose after the breakdown of a ceasefire in Ivory Cost and reports of outbreaks of fighting in several regions. Local exporters and farmers said they feared fighting in the north west could spread to the south to the key growing region, disrupting the industry at a crucial stage of the new crop. Liffe March cocoa closed at #1200 a tonne.

Trading volume on most commodity exchanges were thin, owing to the US Thanks giving holiday. Traders on both Nymex and the Coffee, Sugar and Cocoa Exchange began the long weekend on November 27.

Producers wanting to hedge heir cocoa appeared to have been waiting for a spike in prices, and they were seen taking advantage of the strength. Traders thought that this selling had stopped prices from rising more dramatically. There was also a sense that the market was waiting to see what would happen.

A truce in Ivory Cost held since October 17 saw cocoa prices easing in recent weeks. It touched a low of # 1121 a tonne at one stage as cocoa arrivals to Ivorian ports showed a recovery. Prices had reached #1649 when the fighting peaked in mid October.

Coffee Last week coffee futures sustained their rally, and analysts saw little in the market fundamentals to justify the surge. Despite the global coffee glut, London robusta futures have risen about 40 percent since the beginning of September, with New York arabicas up more than 30 percent. In the Us prices are higher, because of concerns about dry weather in Brazil.

It could cause damage to the 2003-04 crop despite better rainfall this month. A biennial tree cycle and dry weather conditions are expected to result in a smaller 2003-04 Brazilian harvest than the current bumper one- officially estimated at 44.7 million 60n kg bags, while the trade reckons it is 52 million bags.

A potential decrease in the next Brazilian crop and a delayed Vietnamese harvest have contributed to a rise of more than 20 percent in London futures prices since November 1,but the market is still historically low. Brazilian producers expect output in 2003/04 ( from July to June) to fall at least 50 percent from this year, with some analysts putting the fall closer to 25 percent.Brazils’s historical production data since crop year 1965-66 show declines in production of between 41 and 52 percent following bumper crops, mainly affecting the Arabica variety.

Vietnam, the world’s leading robusta coffee producer, said that exports from its 2002-03 crop (the crop year runs from October to September) had reached 143,000 tonnes sofar,up10.9 percent compared with the same period in the previous crop year. A report from the government’s General Statistics Office revised estimated shipments in October to 68000 tonnes from the 50,000 tonnes, previously estimated.

It put exports this month at 75000 tonnes, against 69000 tonnes in the same month last year. Government figures estimated Vietnam’s coffee exports at 753000 tonnes for 2001-02,down from 893000 tonnes in 2000-01.