Bloomberg News

Cocoa Falls to 14-Month Low; Cotton, Orange Juice Advance

March 04, 2013

Cocoa futures fell to a 14-month low on speculation that rain in Ivory Coast, the world’s largest producer, will boost supplies and add to increasing stockpiles. Cotton, orange juice, coffee and sugar advanced.

The U.S. National Oceanic and Atmospheric Administration forecast as much as 40 millimeters (1.6 inches) to 50 millimeters of rain in most of Ivory Coast and Ghana, the second-biggest cocoa grower, through March 11. In February, inventory in warehouses monitored by ICE Futures U.S. jumped 16 percent, the most in 11 months.

“Widespread rains have arrived in West Africa, providing welcome relief to cocoa producers,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said in a report. “This is likely adding to the bearish near-term sentiment.”

Cocoa futures for May delivery slid 1.2 percent to settle at $2,056 a metric ton at 11:58 a.m. on ICE in New York, the lowest closing price since Jan. 6, 2012. The price has dropped 8.1 percent this year.

On March 1, the International Cocoa Organization projected a shortfall of 45,000 metric tons in the 12 months ending Sept. 30. Output in Ivory Coast was estimated at 1.47 million tons, down from 1.486 million tons a year earlier, and Ghana’s production will be 820,000 tons, the London-based group said.

The organization “appears to be confirming a suspicion that has already been simmering on the market for some time: the expectation, initially to be heard frequently, that the deficit could turn out to be around the 100,000-ton mark, is likely to have been pitched significantly too high,” Carsten Fritsch, a commodity analyst at Commerzbank AG in Frankfurt, said in a report.

Cotton Climbs

Cotton futures for May delivery jumped 1 percent to close at 86.26 cents a pound on ICE. Earlier, the price reached 86.75 cents, the highest for a most-active commodity since May 9.

“Modest tightening in projected U.S. fundamentals in March implies cotton prices may see modest concurrent strengthening in the weeks to come,” Gary Raines, an analyst in Nashville, Tennessee, at FCStone LLC, said in an e-mail.

The U.S. Department of Agriculture will probably raise its export estimate to 13 million bales from 12.5 million projected in February, Sholom Sanik, an analyst at Friedberg Mercantile Group Ltd. in Toronto, said in an e-mail.

Orange-juice futures for May delivery advanced 2.5 percent to $1.2395 a pound, the biggest gain since Feb. 12.

Arabica-coffee futures for May delivery rose 2.3 percent to $1.4665 a pound.

Raw-sugar futures for May delivery gained 0.9 percent to 18.08 cents a pound.

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

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


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