Cocoa Gains as Market Braces for Brexit Vote, U.K. Pound Firms

  • London cocoa advances as investors await referundum vote
  • Beans one of few commodities traded in British sterling

Cocoa traders are bracing for the U.K.’s vote Thursday on whether to stay in the European Union as the beans used to make chocolate are one of the few commodities to trade in British pounds.

Futures traded in London advanced Wednesday as investors awaited the vote, and the pound traded near a five-month high against the dollar. Cocoa may gain if a decision to leave the EU resulted in the U.K.’s currency tumbling, while the New York contract traded in dollars may decline.

Cocoa is the only major commodity trading in roughly equal volume, quality and market structure on both sides of the Atlantic, Citigroup Inc. said this week in a report. That’s keeping traders on edge as they monitor the spread between prices.

“A weaker pound could push cocoa prices in London up,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said Wednesday in an e-mail. “So London will outperform New York.”

Cocoa for July delivery rose 0.5 percent to settle at 2,281 pounds ($3,349) a metric ton on ICE Futures Europe at 5:03 p.m. in London. On ICE in New York, the contract for September delivery climbed 0.3 percent to $3,156 a ton after reaching $3,160, the highest for a most-active contract since May 5, leaving the spread at $189 a ton compared with a five-year average of $104 a ton.

The pound advanced as much as 0.8 percent to $1.4774 after appreciating on Tuesday to $1.4783, the strongest since Jan. 4. While momentum shifted last week toward a victory of the campaign to remain in the EU, results of various polls remain mixed.

In other markets in New York:

  • Raw-sugar futures for October delivery fell 0.9 percent to 19.17 cents a pound
  • Arabica-coffee futures for September delivery slid 0.9 percent to $1.397 a pound
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