Cocoa swung between gains and losses in London as investors weighed improving prospects for the smaller of two annual crops in Ivory Coast, the world’s largest producer, and falling exchange stockpiles. Sugar fell.
Cocoa inventories with a valid grading certificate in warehouses monitored by NYSE Liffe stood at 43,020 metric tons as of Jan. 7, down more than 50 percent in the past year. NYSE Liffe will update inventory figures later this week. Rabobank International cut its cocoa price forecasts last week, citing a better outlook for the Ivorian crop. Still, global production will fall about 3 percent to 3.91 million tons this season, according to Macquarie Group Ltd.
“The expected 3 percent fall in this season’s output should be manageable due to the large carried-over stock from the last two seasons’ surpluses and poor demand,” Kona Haque, an analyst at Macquarie in London said in a report e-mailed today. “Certified stocks on Liffe are still trending lower and if we were to get another fall next season, it would be harder to manage and would lead to lower stocks.”
Cocoa for March delivery was 0.1 percent lower at 1,480 pounds ($2,349) a ton by 11:18 a.m. on NYSE Liffe in London. It gained as much as 0.7 percent and lost as much as 0.5 percent earlier today. ICE Futures U.S. in New York, where cocoa trades in dollars, was closed for a holiday. Raw sugar and arabica coffee also trade on ICE.
Cocoa for March delivery last traded 3 pounds a ton above the futures for May, a market structure known as backwardation and that may signal limited supplies. The March contract switched to being more expensive on Jan. 17, raising concerns that traders may try to take delivery when the March contract on NYSE Liffe expires on March 13 amid low stockpiles.
White, or refined, sugar for March delivery fell 0.3 percent to $490.70 a ton on NYSE Liffe, after earlier dropping 0.4 percent to $490, the lowest price for a most active contract since July 2010.
India’s sugar harvest “is unexpectedly ahead of last year’s progress, although growers in Maharashtra may have been tempted to push hard early to rescue what they could of a poor crop,” Tom McNeill, a director at Green Pool Commodity Specialists Pty in Brisbane, Australia, said in a report e- mailed today.
Robusta coffee for March delivery fell 0.6 percent to $1,964 a ton in London.
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.