Cocoa Off Highs But Edging Up As Market Eyes Demand, Weather
Category: Cocoa
(Wall Street Journal) – Cocoa futures edged higher in European trading Wednesday, hovering near Monday’s one-year peak, with prices supported by unfavorable weather for the cultivation of West Africa’s main crop and higher demand for the chocolate-making ingredient.
At 1109 GMT, Liffe cocoa futures traded at GBP1,710 a metric ton, after the market Monday soared to a one-year high of GBP1,729 a ton.
“Cocoa prices are responding to supply shortfalls due to earlier dryness in Ivory Coast and Ghana,” said Rao Achutuni, president of agricultural research firm EGSI consulting. “This combined with the recovering economies of the U.S., the European Union and China are boosting global demand. Cocoa is a marginal deficit/surplus crop, leaning more towards deficits now.”
Mr. Achutuni said he is still bullish on cocoa given the supply and infrastructure issues.
“Competition for land from expanding oil palm industries is a major threat to the future of cocoa farming in West Africa,” he said. “The cocoa industry will have to step in and take a larger stake in cocoa production in order to maintain future needs.”
Elsewhere, November European Union wheat futures traded 0.1% higher at EUR184.75 a ton, with export activity relying on the evolution of the euro-dollar parity.
“The spread between French and Black Sea origins should tighten in the coming weeks, which should lead to more extra-European exports,” said risk manager Agritel.
November robusta coffee edged higher to $1,683 a ton, as the market consolidated from the prior session’s sharp losses. Dealers said that demand for the bitter bean is weak, and traders continue to position themselves in anticipation of a bumper crop from top producer Vietnam.
“It is tough to put together a cohesive bullish argument in coffee, even with billions of [Brazilian] reals in government support, farmer protests, frost and disease concerns,” said Geoffrey Williams, research director at Dublin-based Coffee Insights & Analysis. “The balance sheet looks firmly in surplus, and looks to remain so in the coming seasons.”
London sugar futures for December delivery traded 0.2% lower at $479.40 a ton as ample supplies of the sweetener limit pricing rallies.
