Cocoa Slides as Ivory Coast May Cancel, Resell Contracts

(Reuters) – Cocoa slumped on Friday on news that the Ivory Coast may cancel and resell some 200,000-250,000 tonnes worth of exports, while coffee fell, with robusta coming off a fresh 18-month peak, on profit taking.

Raw sugar contracts remained range-bound, while white sugar rose.

Ivory Coast’s cocoa marketing board has given exporters six days to furnish documentation for export contracts, including proof of a counterparty, or they will be cancelled and resold, the Coffee and Cocoa Council wrote in a memorandum.

The measure is aimed at stamping out speculation in the top grower’s forward sales system. Ivory Coast produces some 40 percent of the world’s cocoa.

December London cocoa plunged 40 pounds, or 1.8 percent, to 2,222 pounds a tonne while December New York cocoa lost $49, or 1.7 percent, to $2,836 a tonne.

A dealer said the “dramatic” Ivory Coast news was hitting cocoa hard as it will force local exporters to hedge, weighing further on the chocolate ingredient’s already bearish price outlook.

London and New York cocoa have sunk some 10 percent over the past three weeks as recent rains in West Africa, where most the world’s cocoa is grown, have improved the outlook for next season’s crop.

ICE November robusta coffee fell $9, or 0.5 percent, to $1,918 a tonne, ending seven consecutive sessions of gains. The contract earlier hit a fresh 18-month peak at $1,932 per tonne.

Robusta prices have surged some 10 percent from nearly four-week lows hit in mid-August, supported by poor crops in Brazil and Indonesia and the prospect of a drop in production in top producer Vietnam.

“(Robusta) moved into overbought territory after the strong rally, so we’re seeing gains pared back a bit,” said Ole Hanson, head of commodity research at Saxo Bank.

“In the next few months I still see higher prices because of the fundamentals, but what’s missing right now is technical support,” he added.

ICE December arabica coffee fell 1 cent, or 0.7 percent, to $1.5375 per lb, having hit 18 month highs on Thursday only to end the session down. The arabica supply situation is not as bullish as robusta, though it is increasingly tightening up.

Brazil said Thursday it had sold 93 percent of arabica coffee from government stocks, having resumed auctions in recent weeks after local roasters complained they were having difficulties securing supplies.

Roasters have said they are using more low-grade arabicas in their blends, replacing some costly robusta beans.

Raw sugar futures dipped but remained well within the recent range of about 19.50 cents to 21 cents, which has held for more than a month.

October raw sugar dipped 0.01 cents, or 0.3 percent, to 20.23 cents a lb while October whites rose $4.30, or 0.8 percent, to $545.60 a tonne.