Cocoa Prices Extend Slide From Recent Highs
Category: Cocoa
(Nasdaq) – Cocoa prices extended a slide from its high for the year Thursday as speculators pulled back from bullish bets in the face of good harvest conditions in the world’s top growing region and recent data indicating weak demand.
Cocoa futures for September delivery fell 2%, settling down $63 at $3,057 a ton on the ICE Futures Europe exchange. Prices are now more than 9% lower since hitting a 2015 high in mid-July, and are trading at their lowest level since early June. Cocoa has been one of the few commodities to post gains this year amid a rout across most of the rest of the sector, with contracts for oil, coffee, copper and many others posting double-digit declines.
Bullish bets on cocoa by speculators such as hedge funds and other money managers have surged 60% since early April, far outnumbering bets that prices will fall, according to data from the U.S. Commodity Futures Trading Commission. As the fundamental supply-and-demand picture has started to weaken for the market, analysts said some of the price decline in the market is a result of bullish traders closing out those trades.
“The market looks to have further downside left to go,” research consultancy The Hightower Report said in a note. Cocoa prices “may continue to face long liquidation pressure until risk appetites and outside markets undergo some significant improvement.”
Cocoa demand data released from Asia, Europe and North America in recent weeks have shown weak commercial buying interest, with Asia — seen as a key growth market — registering its fourth consecutive decline.
Meanwhile, weather forecaster Meteorlogix said scattered showers in West Africa, the world’s top growing region, should favor continued crop development.
In other soft commodity markets, coffee prices fell 1.3% to $1.2425 a ton, sugar fell 0.6% to 10.70 cents a pound, cotton fell 2% to 62.26 cents a pound and orange juice fell 0.2% to $1.3145 a pound.
