(BusinessWeek) – Cocoa gained in London on speculation dry weather will damage the next crop in West Africa, the world’s main growing region. White sugar rose and robusta coffee fell.
Lack of rain in West Africa is threatening cocoa crops, with central Ivory Coast and west-central Ghana possibly getting drier than normal weather over the next two weeks, David Streit, an agricultural meteorologist at Commodity Weather Group, said on Aug. 5. A few thunderstorms from Ivory Coast eastward to Nigeria and Cameroon for the next two days will produce daily rainfall amounts of 0.10 inch to 0.50 inch, AccuWeather forecasts.
“While light rains are expected in the Ivory Coast, coverage is far from complete and the amounts of rain, while welcome, are not sufficient,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago said in a report e-mailed yesterday. Weather is taking “center stage.”
Cocoa for September delivery rose 0.7 percent to 1,621 pounds ($2,498) a metric ton by 11:34 a.m. on NYSE Liffe. Cocoa for September delivery gained 0.6 percent to $2,402 a ton on ICE Futures U.S. in New York.
Cocoa for September delivery in London was 17 pounds a ton more expensive than the futures for December, reversing a discount a month ago, exchange data on Bloomberg showed. That market structure in which earlier-dated contracts are priced lower than later ones may signal concern about supplies.
Brazil Coffee
Robusta coffee for delivery in September fell 0.1 percent to $1,879 a ton on NYSE Liffe. Arabica for delivery in September advanced 0.7 percent to $1.187 a pound on ICE.
Arabica fell as much as 2.1 percent yesterday after the Brazilian government failed to announce measures to support growers. Brazil is considering helping producers by holding four auctions of 1 million bags of coffee each, a person familiar with the discussions said July 18.
“The Brazilian economy currently finds itself in a difficult situation, with high inflation, poor growth prospects, an increased current account deficit and high debt levels,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report e-mailed today. “It is therefore understandable that the government is finding it hard to dig deep in order to provide financial support to a relatively small group.”
White sugar for October delivery advanced 0.3 percent to $489.80 a ton in London. Raw sugar for delivery in October dropped 0.1 percent to 16.53 cents a pound in New York.
