Cocoa Slides After Steady Increase

(Nasdaq) – Cocoa prices slipped Thursday with few reasons to move higher on disappointing demand data and reassurances from Ghana that cocoa production is on track.

Cocoa for December delivery fell 0.1% to end at $3,215 a ton on the ICE Futures U.S. exchange, on track for its first drop in four sessions.

Ghana, the world’s second-largest producer of cocoa, produced 696,000 tons of beans last season after originally forecasting it could hit 1 million tons, driving up cocoa prices. That has led traders to place bullish bets that Ghana wouldn’t be able to deliver on the 850,000 tons it has forecast for this season, along with orders that have been rolled forward from last season.

Noah Amenyah, public affairs manager for Ghana’s cocoa board, known as Cocobod, said warehouses in Ghana were holding roughly 100,000 tons of cocoa beans, almost twice the amount stockpiled at the same period last season.

At the same time, the Hershey Co. said in its third-quarter earnings call that demand for the main ingredient in chocolate has been sluggish in China, largely looked to by the industry as the next frontier for growth. The company said sales declined by $18 million in its chocolate business segment in China.

Still, brokers said they don’t think the rally is over yet.

“So many are still under the impression that we may still have some shortfalls going into next season,” said Hector Galvan, senior market strategist at RJO Futures in Chicago. “Until that fades, poor grind or not, people are going to keep testing the levels from last month.”

In other markets, arabica coffee for December rose 1% to end at $1.203 a pound, raw sugar for March fell 0.6% to end at 14.56 cents a pound, cotton for December slumped 0.6% to close at 62.32 cents a pound and frozen concentrated orange juice futures for January fell 1.3% to end at $1.3255 a pound.