Ivory Coast, the world’s largest cocoa producer, is offering to sell beans for shipment in the 2014-15 season after futures traded on the NYSE Liffe exchange in London entered a bull market earlier this month.
Beans for shipment from October to December 2014 were offered at today’s morning auction at a minimum price of 1,293 CFA francs ($2.65) a kilogram (2.2 pounds), according to data on the website of industry regulator Le Conseil du Cafe-Cacao. That would mean a premium of about 17 pounds ($27) a metric ton to the March 2015 futures, according to Bloomberg calculations. The nation also offered beans for the same period yesterday.
Cocoa entered a bull market on Sept. 5 and rose to 1,700 pounds a ton on Sept. 16, the highest level in almost a year. In New York, futures entered a bull market last month and are this year’s best performer in the Standard & Poor’s GSCI gauge of 24 raw materials followed by cotton and crude oil.
“It looks like they are taking advantage of the higher prices,” Kona Haque, a London-based analyst at Macquarie Group Ltd., Australia’s biggest investment bank, said by phone today, commenting on the sales offers. “Prices need to stay high to accelerate selling and to dampen short-term demand.”
Global cocoa supplies will fall short of demand by 195,000 tons in the 2013-14 season starting next month, Damien Thouvenel, a trader at Paris-based Sucres et Denrees SA, said in a Sept. 12 interview. That follows a shortage of 155,000 tons this year. Processing will gain 3 percent to 5 percent in 2013-14, Peter B. Johnson, chief executive officer at grinder Euromar Commodities GmbH, said in an interview the same day.
Ivory Coast offered beans for shipment from October to December 2014 at yesterday’s auction at a minimum price of 1,309 CFA francs a kilogram, according to CCC data. That would mean a premium of about 38 pounds a ton to the exchange price. The nation is starting to gather its main crop, the bigger of two annual harvests. Cocoa futures for December delivery fell as much as 1.8 percent yesterday in London.
“Main-crop beans were said to be coming down in Ivory Coast for the first time yesterday, making it the unofficial start of the new season,” Eric Sivry, head of agricultural options brokerage at Marex Spectron Group in London, said by e-mail today. “Additionally, the word went around the market that 2014-15 crop was already being marketed by the CCC via the auction screen. This is the type of information that may have led the market to retrace a little.”
Chocolate sales will rise 6.2 percent to a record $117 billion next year, estimates Euromonitor International Ltd., a consumer research company in London. Demand for chocolate in China will expand 11 percent annually in the five years to 2018, 13 percent in Brazil, 22 percent in India and 8 percent in eastern Europe, according to Hershey Co., maker of Hershey Kisses and Reese’s Peanut Butter Cups.
Cocoa for delivery in December gained 1.3 percent to 1,696 pounds a ton by 4:13 p.m. in London, erasing a drop of as much as 0.8 percent.