Investors Raise Bullish Cocoa Bets to Record for a Third Week

Money managers raised bullish bets on cocoa traded in London to a record for a third straight week as demand accelerates and shortages loom, according to data from NYSE Liffe, the derivatives arm of NYSE Euronext.

Investors were net-long, or betting on higher prices, by 65,317 futures and options in the week ended Oct. 8, the Commitments of Traders report on the exchange’s website showed today. That was the largest bullish bet since publishing of trader holdings began in 2011 and compared with the previous record of 64,759 contracts a week earlier. The beans for December delivery rallied 3.7 percent in the latest period.

Cocoa processing, an indication of demand, rose 4.7 percent in Europe in the third quarter, the European Cocoa Association said Oct. 10. The so-called grind fell 16 percent in the year-earlier period. North American grindings may have risen 5.1 percent from July to September, according to the average of estimates from 10 traders and analysts surveyed by Bloomberg.

The European processing figures are “confirming the positive uptrend in western cocoa demand,” Kona Haque, a London-based analyst at Macquarie Group Ltd., said in a report e-mailed Oct. 11. “The much-needed rains in West Africa are now here, but this is delaying harvesting, at a time when grinders are desperate for new supplies.”

Bull Market

Global cocoa supplies will trail demand by 173,000 metric tons in the year started Oct. 1, according to Macquarie. A 113,000-ton shortage is estimated for the following season, said Haque, who correctly forecast a third-quarter price rally. Cocoa entered a bull market in London last month. Global chocolate sales will rise 6.2 percent next year to a record $117 billion, according to Euromonitor International Ltd.

In robusta coffee, money managers reduced their net-short position, or bet on falling prices, to 4,696 futures and options in the latest week, the data showed. That compares with 6,690 contracts a week earlier. The beans used to make instant coffee gained 3.7 percent in the period.

Investors boosted bets on rising white-sugar prices by 12 percent. They were net-long by 9,925 futures and options, against 8,831 contracts a week earlier, exchange data showed. The sweetener rose 1.8 percent in the period.

In feed wheat, money managers were net-short by 325 contracts, down from 440 lots a week earlier. The grain advanced 4 percent in the period.

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