Cocoa Rises to One-Week High in New York on Supply Shortfall; Coffee Gains
Cocoa prices rose to a one-week high on signs that a global-production deficit will widen. Coffee gained for the first time in three sessions on estimates that supplies will shrink.
Cocoa output will trail consumption by 69,000 metric tons in the year ending Sept. 30, the International Cocoa Organization said today. On March 3, the group projected a deficit of 18,000 tons, Last year’s surplus was 67,000 tons. Cocoa prices have advanced 22 percent in the past year.
The widening deficit is “definitely giving it a little base here,” said Boyd Cruel, a senior analyst at Vision Financial Markets in Chicago. “For the most part, that type of news will give the market some underlying support.”
Cocoa for July delivery rose $56, or 2 percent, to $2,895 a ton on ICE Futures U.S. in New York. Earlier, the price reached $2,899, the highest level for a most-active contract since May 14. This week, the commodity climbed 3 percent, snapping a two- week slide.
Today, Fortis Bank Nederland NV and VM Group estimated the global deficit will be 136,000 tons in the 12 months ended Sept. 30 and narrow to 3,000 tons in the following year. Last month, Fortis and VM forecast a deficit of 124,000 tons this year and a 21,000-ton surplus next year.
Arabica-coffee futures for July delivery rose 0.75 cent, or 0.6 percent, to $1.324 a pound in New York. The price dropped 1.4 percent this week.
Arabica coffee is grown mainly in Latin America and brewed by specialty companies including Starbucks Corp. Robusta beans, used in instant coffee, are harvested mostly in Asia and parts of Africa.
Today, Fortis and VM reduced their 2010-2011 surplus estimates. The robusta-bean supply will be 2.98 million bags, down from 3.41 million, and arabica will total 6.67 million bags, down from 6.99 million. A bag weighs 60 kilograms (132 pounds).
Arabica futures have dropped 2.5 percent in the past year.
On London’s Liffe exchange, cocoa futures for July delivery rose 36 pounds, or 1.6 percent, to 2,315 pounds ($3,350) a ton. Robusta-coffee futures for July delivery were unchanged at $1,334 ton.