Bloomberg News

Cocoa Slides as Demand May Weaken After Rally; Coffee Retreats

October 28, 2011

Oct. 28 (Bloomberg) -- Cocoa fell in New York, ending a five-session winning streak, on speculation demand may wane after prices reached the highest level in almost six weeks. Coffee slid as commodities retreated.

Cocoa climbed as much as 2.7 percent in New York yesterday as bean arrivals at ports in top global producer Ivory Coast slowed in the second week of October. Gains in London trading of as much as 1.5 percent were limited as producers hedged their sales for the new crop, according to ICAP Futures LLC. Prices also slid today as the dollar strengthened.

“Cocoa is falling after yesterday’s rally as industry is not buying because of a higher dollar and producers are hedging,” Luis Rangel, vice president of commodity derivatives at ICAP Futures in Jersey City, New Jersey, wrote in an e-mailed response to questions today.

Cocoa for December delivery dropped 1.5 percent to $2,715 a metric ton by 8:32 a.m. on ICE Futures U.S. in New York. Prices yesterday touched $2,767, the highest level since Sept. 19. Cocoa for December delivery fell 1.5 percent to 1,688 pounds ($2,720) a ton on NYSE Liffe in London.

“Every single cocoa operator is so convinced about the presence of origin-related hedging above the U.K. market that it can hardly move higher,” Eric Sivry, head of agriculture options brokerage at London-based Marex Financial Ltd., said by e-mail yesterday. He correctly forecast that cocoa prices on ICE would overtake Liffe intraday for the first time since the December contracts started trading in 2009.

Port Deliveries

Bean deliveries to Ivory Coast’s ports of Abidjan and San Pedro totaled 12,193 tons in the second week of October, down 26 percent from the first week, according to an industry official with access to the data.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, increased as much as 0.4 percent. Gains by the dollar make raw materials priced in the currency more expensive in terms of other monies.

Coffee and refined sugar fell as commodities slid on concern slowing economies may stall demand in Europe. The Standard & Poor’s GSCI index of 24 raw materials declined as much as 1.2 percent.

Arabica coffee for December delivery retreated 1 percent to $2.323 a pound in New York. Robusta coffee for January delivery slid 1.6 percent to $1,872 a ton in London.

Raw sugar for March delivery was little changed at 26.85 cents a pound on ICE. White, or refined, sugar for December delivery slid 0.6 percent to $710.50 a ton on NYSE Liffe.

--Editors: Dan Weeks, Claudia Carpenter.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.


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