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Investors’ Bets on Cocoa-Price Gains Return to Record High

Money managers’ bullish bets on cocoa traded in London returned to a record high in the latest week, according to data from NYSE Liffe, the derivatives arm of NYSE Euronext.

Investors were net-long, or betting on price gains, by 65,466 futures and options as of Oct. 22, the Commitments of Traders report on the exchange’s website showed today. That was up from 65,234 contracts a week earlier and compares with the former record of 65,317 lots as of Oct. 8. Cocoa for delivery in March retreated 1.4 percent in the latest period.

Futures gained 19 percent in London this year amid forecasts for supplies to trail demand in the 2013-14 season begun this month. The shortage will be 173,000 metric tons as consumption builds and dry weather reduces crops in West Africa, the world’s main growing region, estimates Macquarie Group Ltd. Prices declined in the past two weeks.

“Cocoa prices, 2013’s star performer, may be running out of steam,” Kona Haque, a London-based analyst at Macquarie, said in a report e-mailed today. “Still very much driven by speculative long positions, the market may need a continued influx of bullish news and data points to keep the momentum going,” she said.

North America

Cocoa entered a bull market last month as demand improved. Bean processing in Europe, accounting for 40 percent of usage, rose 4.7 percent in the third quarter, according to the European Cocoa Association. The so-called grind advanced 12 percent in Asia in the period and 8.2 percent in North America, data from the Cocoa Association of Asia and the National Confectioners Association in Washington showed.

Lower prices would represent “a good entry position” because fundamentals are still “compelling,” Haque said.

Bets on lower prices for robusta coffee soared, the data showed. Money managers were net-short by 7,931 futures and options in the latest week, from 483 contracts. The beans used to make instant coffee and espresso slid 5.5 percent in the period in anticipation of a record harvest in Vietnam, the world’s largest producer of the variety.

Investors boosted bets on rising white-sugar prices by 19 percent. They were net-long by 12,058 futures and options, against 10,132 contracts a week earlier, exchange data showed. The sweetener rose 2.7 percent in the period.

In feed wheat, money managers were net-short by 159 contracts, down from 331 lots a week earlier. The grain advanced 0.8 percent in the period.

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