Cocoa Gains to 2-Year High on Dollar Amid Shortage; Coffee Falls

(Bloomberg) – Cocoa climbed to the highest level in more than two years in New York as the dollar weakened against the pound, triggering buy orders amid forecasts for shortages this season. Arabica coffee fell.

The beans used to make chocolate started rallying at about 4:34 a.m. in New York and rose as much as 2 percent to the day’s high of $2,844 a metric ton on ICE Futures U.S. That was the highest since Sept. 14, 2011. The pound gained for a fifth day against the dollar after U.K. manufacturing output rose in November at a faster pace than economists forecast, adding to evidence the recovery is gathering momentum.

“After a strong opening in New York, currency inspired with the dollar losing further ground against sterling, the start of the new month has seen a continued speculative-led buying surge taking prices back up to levels not seen in two years,” Justin Grandison, director of cocoa brokerage at ABN Amro Clearing Bank N.V., said by e-mail today.

Cocoa for March delivery rose 1.4 percent to $2,826 a ton by 7:22 a.m. on ICE Futures U.S. in New York. Futures trading volumes were 58 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg. In London, cocoa for March rose 1.3 percent to 1,767 pounds ($2,895) a ton on NYSE Liffe.

Global cocoa supplies will fall short of demand by 162,000 tons in 2013-14, according to KnowledgeCharts, a unit of Commodities Risk Analysis. That follows a 198,000-ton deficit in the prior period.

Net-Long Record

Money managers were net long by 69,117 futures and options in London cocoa as of Nov. 26, a record, according to data on the website of NYSE Liffe. That compares with 68,949 contracts a week earlier.

“With limited offers in the early stages today facilitating the rise, we wait and see whether this first move of the month draws out any origin-related selling to provide some element of resistance,” Grandison said.

Raw sugar for March delivery was unchanged at 17.15 cents a pound on ICE. Refined, or white, sugar for March delivery slid 1.3 percent to $458.20 a ton on Liffe.

“Physical sugar prices remain weak even though demand appears to have picked up a little,” Kingsman SA, a Lausanne, Switzerland-based unit of McGraw Hill Financial Inc.’s Platts, said in a report e-mailed today.

Arabica coffee for March delivery fell 0.2 percent to $110.60 a pound in New York. Robusta coffee for delivery in January gained 0.7 percent to $1,653 a ton in London.