Cocoa Advances in London to 21-Year High on Increased Speculative Buying

Cocoa advanced to the highest price in at least 21 years in London on speculative buying because of low stockpiles.

Cocoa for July delivery climbed 101 pounds, or 4 percent, to 2,604 pounds ($3,937) a metric ton on the Liffe exchange at 3:52 p.m. local time. It earlier surged as much as 4.9 percent to 2,625 pounds a ton, the highest intraday price since at least January 1989. Cocoa for September delivery rose 3.1 percent to $3,035 a ton on ICE Futures U.S. in New York.

“There is a lot of speculative buying and this seems to be happening due to the fact that industry has low stocks,” Claudia Lenz, an analyst with Bank Vontobel AG in Zurich, said by phone. Instead of the average of 12 months, users are holding stockpiles that will cover only half that period, she said.

Worldwide grindings, a demand gauge, will climb 4 percent in the 2009-2010 season ending in September, according to the London-based International Cocoa Organization.

Cocoa production will lag behind usage by 69,000 tons in the year through September, the London-based group said in May. It had estimated the shortage at 18,000 tons in March.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net.

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