Cocoa Rebounds in London as Chocolate Makers Buy; Sugar Retreats

Cocoa rebounded in London, after falling the most in almost a month yesterday, as chocolate makers took advantage of the price drop to buy. Sugar retreated.

Futures slid 2 percent yesterday after investors boosted bullish bets to a record, leaving the market susceptible to a sell-off. That was the biggest drop for a most-active contract since Nov. 11. Prices also fell as bean arrivals in Ivory Coast, the world’s leading producer, surged 42 percent from the start of the season through to Dec. 8, according to data from KnowledgeCharts, a unit of Commodities Risk Analysis.

“It looks like we have some industry buying as it is said they only have four months worth of coverage,” Jerome Jourquin, head of agricultural derivatives at broker Aurel BGC in Paris, said by e-mail today. “As they don’t want to go below that, they are taking the chance to buy when the market dips.”

Cocoa for delivery in March gained 0.5 percent to 1,735 pounds ($2,853) a metric ton by 12:03 p.m. on NYSE Liffe in London. Cocoa for delivery in the same month advanced 0.8 percent to $2,774 a ton on ICE Futures U.S. in New York. Futures trading volumes were 28 percent lower than the average for the past 100 days at this time of day, according to data compiled by Bloomberg.

Money managers were net-long in cocoa, or betting on price gains, by a record 73,190 futures and options in the week ended Dec. 3, the Commitments of Traders report on NYSE Liffe’s website yesterday showed. That was up from 69,117 contracts a week earlier. Ivorian bean arrivals were 611,000 tons from Oct. 1 to Dec. 8, up from 431,000 tons a year earlier, data from the Bethlehem, Pennsylvania-based KnowledgeCharts showed.

Shortage Forecasts

Cocoa futures climbed 21 percent this year in London and 24 percent in New York, the second-biggest advance in the Standard & Poor’s GSCI gauge of 24 raw materials after natural gas. Prices rallied as investors bought on shortage forecasts. Supplies fell short of demand by 160,000 tons in 2012-13 and a second year of shortages is expected in 2013-14, according to the London-based International Cocoa Organization.

“It was above all the deficit on the global cocoa market for the 2012-13 season, a figure that had been repeatedly raised and has meanwhile reached 160,000 tons, which explained the price movement,” Carsten Fritsch, an Commerzbank AG analyst in Frankfurt, said in a report e-mailed today. “This applies all the more given that a deficit is also expected for the current 2013-14 season, which could likewise turn out to be a three-digit figure.”

Refined, or white, sugar for March delivery fell 0.3 percent to $446.90 a ton in London. Raw sugar for March delivery was 0.5 percent lower at 16.47 cents a pound in New York.

Robusta coffee for March delivery gained 1 percent to $1,740 a ton on NYSE Liffe. Arabica coffee for delivery in the same month was 0.3 percent higher at $1.0645 a pound on ICE.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.