Cocoa Falls After Bullish Bets Climb to Record; Coffee Rallies

(Bloomberg) – Cocoa fell to a one-week low in New York on speculation investors who hold record bullish bets will start to sell futures to lock in profits. Coffee gained.

Speculators were net-long, or betting on rising prices, by 69,808 cocoa contracts in the week ended Nov. 5, data from the U.S. Commodity Futures Trading Commission compiled by Bloomberg showed. That was the highest since the data started being published in 2006. Cocoa prices, which gained 19 percent this year on speculation of shortages, slid 4.6 percent since reaching this year’s high of $2,780 a metric ton on Oct. 22.

“A classic break-out failure has occurred at the critical $2,700-a-ton resistance area, offering a major technical sell signal and the opportunity for a crash-down kind of market,”Shawn Hackett, the president of Hackett Financial Advisors in Boynton Beach, Florida, said in a report e-mailed yesterday. “I expect prices to move down to $2,300 in the months ahead.”

Cocoa for March delivery fell 0.7 percent to $2,651 a ton by 6:07 a.m. on ICE Futures U.S. in New York, the lowest for a most-active contract since Nov. 4. Futures trading volumes were amost double the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Cocoa for the same delivery month slid 0.7 percent to 1,696 pounds ($2,711) a ton on NYSE Liffe in London.

Futures gained in New York this year on forecasts for shortages. Supplies will fall short of demand by 203,000 tons in the 2013-14 season began last month, according to data on the website of KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem, Pennsylvania. That follows a deficit of 221,000 tons a year earlier, the data showed.

‘Bullish’ Pillars

“Cocoa has been riding two major bullish pillars in the steady bull move since the summertime,” Hackett said. “One has been dry weather in the Ivory Coast and the second is the view of apparent strong demand in Europe and the United States. Both bullish pillars have been overplayed and have already been factored into current high prices.”

NYSE Liffe will update trader holdings position later today. As of Oct. 29, money managers held record bets on higher London cocoa prices at 67,131 contracts, exchange data showed. The bourse started publishing trader positions in 2001.

Arabica coffee for delivery in December rallied 1.1 percent to $1.0515 a pound in New York. Robusta coffee for delivery in January was little changed at $1,477 a ton in London.

Arabica futures rallied as investors’ bets on lower prices reached a record 40,195 contracts as of Nov. 5, fueling speculation money managers would start to buy futures, data from the Washington-based CFTC showed.

Raw sugar for delivery in March gained 0.2 percent to 18.12 cents a pound on ICE Futures U.S. Refined, or white, sugar for the same delivery month was little changed at $480.70 a ton on NYSE Liffe.