Bloomberg News

Cocoa Falls Most in Six Weeks on Global Surplus; Coffee Declines

June 16, 2011

June 16 (Bloomberg) -- Cocoa futures dropped the most in six weeks on speculation that global production will exceed demand this season. Coffee also declined.

There may be a global cocoa surplus of 156,000 metric tons in the season that ends in September, according to INTL Hencorp Futures LLC. Prices of the beans will drop because of record production in Africa, the world’s largest supplier, Oscar Schaps, the managing director of Hencorp, said yesterday.

“The fundamentals are not very friendly,” said Drew Geraghty, a broker at ICAP Futures LLC in Jersey City, New Jersey. “The macro scenario, and especially the stronger dollar, are adding further pressure.”

Cocoa for September delivery fell $89, or 3 percent, to settle at $2,886 a ton 12:01 p.m. on ICE Futures U.S. in New York, the biggest slump for a most-active contract since May 5.

The dollar gained for the second straight day against a basket of six major currencies, making raw materials priced in the greenback less attractive for buyers with other currencies.

Cocoa supplies from the Ivory Coast, the world’s largest grower and exporter, were disrupted after President Alassane Ouattara ordered a ban on exports to cut off funds to former leader Laurent Gbagbo, who refused to cede power after losing a Nov. 28 election. Prices surged to a 32-year high of $3,775 on March 4.

Gbagbo was captured in April, and Ouattara ended the ban by April 15. Cocoa futures have slumped 24 percent from this year’s high.

Arabica-coffee futures for September delivery declined 4.7 cents, or 1.8 percent, to $2.6115 a pound in New York.

In London, cocoa and robusta coffee also retreated.

--With assistance from Maria Kolesnikova in London and Elizabeth Campbell in Chicago. Editors: Steve Stroth, Patrick McKiernan

To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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