Cocoa rebounded in London on speculation producing nations in West Africa, the main growing region, have sold a lot of their crops, removing some hedging pressure from futures markets. Coffee and sugar slid.
Producing countries may have sold up to 250,000 metric tons of cocoa in the past 10 to 15 days, according to London-based futures and options brokerage Marex Spectron Group. Prices fell as much as 1.3 percent in London yesterday as money managers boosted bets on higher prices to this year’s high in the week ended April 16, leaving the market vulnerable to liquidation.
“Cocoa collapsed yesterday because speculators bought more -mostly covering shorts- than initially thought,” Eric Sivry, head of agriculture options brokerage at Marex Spectron, said by e-mail today. “With origins having sold a lot recently, selling pressure has been slightly removed.”
Cocoa for July delivery gained 1 percent to 1,552 pounds ($2,364) a ton by 10:57 a.m. on NYSE Liffe in London. It rose as much as 1.6 percent. Cocoa futures for July delivery rose 0.6 percent to $2,324 a ton on ICE Futures U.S. in New York.
Money managers boosted their net-long position in cocoa, a wager on a higher market, to 27,305 futures and options contracts in London in the week ended April 16, the Commitments of Traders report published on NYSE Liffe’s website showed. That’s up from 19,677 contracts a week earlier and the highest net-long position this year, according to data on Bloomberg.
Robusta-coffee futures for delivery in July slid 1 percent to $2,061 a ton on NYSE Liffe. Arabica-coffee futures for delivery in July fell 0.6 percent to $1.423 a pound on ICE.
Robusta coffee for May was $22 a ton cheaper than the July futures yesterday. That compares with a discount of $35 a ton a week earlier. The discount widened again today to $27 a pound at the time of writing. The first notice for the May contract is on May 1. That’s when holders of futures must notify counterparties whether they intend to accept physical delivery.
“The May/July in London firmed partly on the back of the liquidity drying up and partly as a result of the May buyer returning once again,” ABN Amro Markets U.K. Ltd., said in a report e-mailed today. “Roasters lie in wait, patiently looking for better prices.”
White sugar for August delivery was down 0.3 percent to $502.60 a ton in London. Raw sugar for July delivery slid 0.3 percent to 17.68 cents a pound in New York.
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.