West Africa, Europe May Ship Cocoa Beans to U.S. on Higher Price

Nov. 17 (Bloomberg) -- West African and European cocoa traders may ship more beans to the U.S. if the New York price stays above that for the beans traded in London and premiums in the U.S. physical market remain high.

Cocoa for March delivery on ICE Futures U.S. in New York cost more than beans for delivery in the same month on NYSE Liffe in London in eight of 12 trading days this month up to yesterday, data on Bloomberg show. The price in New York closed $6.29 a metric ton above London yesterday, according to the data.

“With New York trading at a premium to London, the incentive to bring cocoa to the U.S. both from West Africa and from Europe is growing,” Luis Rangel, vice president of commodity derivatives at brokerage ICAP Futures LLC in Jersey City, New Jersey, said yesterday by e-mail.

Tendering certain types of cocoa beans against the March contract on ICE is already more profitable than delivering it into the December contract on NYSE Liffe, according to London-based broker Marex Spectron Group Ltd.

“The temptation to ship existing stock in Europe to the U.S.A. is growing,” Marex wrote in a report this month. “The U.S.A. is in danger of attracting far more cocoa than is required normally.”

Ivorian cocoa in Europe was at a premium of 60 pounds ($95) a ton above the December contract on NYSE Liffe yesterday, according to data on the website of the Hamburg Cocoa & Commodity Office GmbH.

In the U.S., Ivorian beans were at a premium of $180 a ton above the March contract on ICE, the most active, on Nov. 11, data from the Cocoa Merchants’ Association of America show. The association is scheduled to update prices again tomorrow.

Cocoa for December delivery slid 1.1 percent to 1,561 pounds ($2,463) a ton by 1:58 p.m. on NYSE Liffe in London. Cocoa for March delivery retreated 1.2 percent to $2,506 a ton on ICE Futures U.S. in New York.

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.