Cocoa Near 1-year High; Weather Concerns, Good Demand Support Prices
Category: Cocoa
(Wall Street Journal) – Cocoa futures hovered around their recent one-year highs in early European trading Thursday, supported by indications of strong demand and ongoing fears that rainfall levels in West Africa are insufficient for the crop.
At 0950 GMT, December Liffe cocoa futures traded flat at GBP1,708 a metric ton, after the market hit an intraday high of GBP1,721 a ton. On September 16, prices were at a one-year high of GBP1,729 a ton.
“There has been a big change in the structural supply and demand situation for the [cocoa] market — one that snuck up on us rather than some major event,” Jonathan Parkman, head of agriculture at Marex Spectron said.
Over the summer months dealers have focused on a lack of rainfall but, at the same time, there were some pretty good numbers for chocolate sales around the world, said Mr. Parkman.
“The surprising bit was that there seemed to be a better-than-expected recovery in the core markets such as North America and Northern Europe,” he said. “It wasn’t that people were eating a lot more chocolate, but the return of confidence has allowed the consumer to buy a bit more of the premium brand chocolates.”
November robusta coffee futures advanced 1.2% to $1,700 a ton, consolidating from the prior session’s sharp losses as dealers continue to position themselves ahead of Vietnam’s expected bumper crop.
Prices have found a temporary floor but are struggling to position for a move higher, with important technical indicators showing deflating momentum. Any moves lower could target $1,650 a ton in the coming sessions, said Kash Kamal, research analyst at Sucden Financial brokerage in London.
Elsewhere, December London sugar futures firmed on dealer short-covering, said a London-based sugar analyst. Gains would likely be limited as technical indicators remain skewed to the downside.
November European wheat futures edged higher 0.3% to EUR185.50 a ton.
“Trade was influenced by the Fed’s decision to maintain its existing stimulus program,” said Luke Mathews, analyst at Commonwealth Bank of Australia. “U.S. wheat prices have consolidated sideways over the past two weeks, yet the medium-term downtrend remains firmly in place.”
