Cocoa Falls Into Bear Market As Demand Sours

January 30th, 2015

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Category: Cocoa

Cocoa-Beans-in-Bag450x299(Wall Street Journal) – Cocoa prices fell into a bear market Thursday due to weaker demand from processors of the key chocolate ingredient and large harvests of the beans.

The most actively traded cocoa contract on the ICE Futures U.S. exchange has slid more than 20% from its Sept. 24 peak of $3,371 a ton, the definition of a bear market. The contract, for March delivery, fell 1.1% to $2,686 a ton, the lowest settlement since Jan. 21, 2014.

Last week, the Cocoa Association of Asia said cocoa grinding during the fourth quarter of 2014 fell 17% from a year ago. Grindings measure the tonnage of cocoa beans factories process and are considered a barometer for demand. Europe and North America also reported larger-than-expected declines in similar data earlier this month.

Cocoa production world-wide rose close to 11% in the last October-September crop season, from the previous 12-month period, according to the International Cocoa Organization.

The March arabica-coffee contract tumbled 4.6% to settle at $1.60 a pound, as rain forecast for Brazil’s main arabica-growing regions helped ease concerns that dry weather earlier this year would again crimp the harvest. Brazil is the world’s top producer of arabica coffee, a variety prized for its mild flavor and often used in gourmet blends.

Raw sugar for March fell 2% to 14.85 cents a pound, the lowest since Jan. 12.

Orange-juice concentrate for March fell 0.7% to end at $1.3445 a pound, the lowest since Nov. 17, as a lack of crop-damaging frost in Florida removed the risk of the top U.S. citrus-producing state experiencing a further drop in output. Growers there reaped the smallest crop in almost three decades last season as they battled a crop-ravaging citrus-greening disease.

Cotton futures bucked the trend among commodity markets after the U.S. Department of Agriculture reported a surge in sales of the fiber abroad. In the week ended Jan. 22, merchants sold a net 546,200 bales of upland-variety cotton, the most since the season began on Aug. 1 and up 90% from the four-week average.

The March cotton contract rose 0.2% to 59.57 cents a pound, the highest since Jan. 13.

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