By Julie Wernau

Cocoa futures ticked higher Tuesday, with bullish speculators piling into pricey options contracts in the out months.

Traders said the cocoa trade is attempting to suss out which price direction speculators are expecting from cocoa this year and taking clues from market surveys and the options market.

Cocoa for March delivery rose 1.2% to $2,191 a ton on the ICE Futures U.S. exchange.

"This move on the day isn't giving us a lot of conviction," said Peter Mooses, senior market strategist at RJO Futures in Chicago.

Cocoa futures last year had their worst year since 1999 on improved production prospects in West Africa, the largest growing region. As of last Tuesday, hedge funds and other money manager betting on cocoa prices falling outweighed the bulls by 2,581 contracts, the third straight week in which sentiment has melted, according to CFTC data, and the most bearish investors have been on cocoa since June 26, 2012.

Last week, cocoa processing data out of Europe and North America, used as a proxy for demand, disappointed analysts, who blamed previously soaring cocoa prices that led to price increases from confectioners.

That has some investors betting that cocoa could have a turnaround this year, with recently lower prices boosting demand for beans.

Traders are closely watching the weather in West Africa for signs of potential production woes. West Africa is nearing the end of the Harmattan period, yearly strong winds that affect West African growing regions and can lower soil moisture, damaging the development of pollinated flower. So far the regions has had one of the weakest number of Harmattan days since 2010.

So far, arrivals of beans in Ivory Coast and Ghana--the two largest growers--are slightly behind last year, said Rotterdam-based Cocoanect. But they warn that isn't a reason to get bullish on cocoa, as in Ivory Coast the arrivals have been slower due to a local backlog, not a lack of beans.

In other markets, raw sugar for March was up 0.1% at 20.65 cents a pound, arabica coffee for March lost 0.6% to $1.5455, frozen concentrated orange juice for March was up 1% at $1.641 a pound, and cotton for March delivery lost 1.8% at 73.31 cents a pound.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

January 24, 2017 12:01 ET (17:01 GMT)

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