Bloomberg News

Cocoa Falls as Technical Indicators Turn Bearish; Coffee Drops

May 07, 2013

Cocoa fell in London and extended declines in New York as technical indicators turned bearish amid sufficient global supplies. Coffee retreated.

Cocoa climbed 9 percent so far this year on NSYE Liffe and 7.3 percent on ICE as money managers boosted bets on higher prices because of “improving chart patterns,” broker INTL FCStone Inc. said in a report e-mailed today. Technical indicators look “remotely bearish for the first time in several sessions,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a report e-mailed yesterday.

“We remain somewhat cautious on the markets going into the summer months, as outside of Indonesia, there does not seem to be any pressing supply issues,” FCStone said. “We think prices will struggle to take out $2,570 a ton mark in May, while a possible correction could take us down to $2,270 a ton.”

Cocoa for July delivery fell 0.2 percent to 1,564 pounds ($2,430) a metric ton by 10:27 a.m. on NYSE Liffe in London. The exchange was closed yesterday for holidays. Cocoa for July delivery slipped 0.1 percent to $2,399 a ton on ICE Futures U.S. in New York, after dropping as much as 1.3 percent yesterday.

Money managers boosted bets on rising prices of London cocoa to the highest level in almost five months in the week ended April 23, according to NYSE Liffe. The net-long position rose to 39,764 futures and options contracts in the period, up from 27,305 contracts a week earlier and the highest net-long position since Dec. 4, exchange data showed. NYSE Liffe will update trader holdings data later today.

Indonesia, Ghana

Cocoa shipments from Indonesia’s Sulawesi fell to 5,905 tons in April from 8,662 tons a month earlier, Firman Bakri, executive secretary at the Indonesian Cocoa Association, said on May 1. Indonesia is the third-biggest cocoa producer after Ivory Coast and Ghana.

“We are not as bullish on the tropicals, since the markets are well supplied in the case of sugar and coffee, while cocoa seems to be rising more on technicals than anything else, with no signs of any pressing supply issues,” FCStone said.

Robusta coffee futures for delivery in July slipped 0.1 percent to $2,019 a ton on NYSE Liffe. Arabica coffee futures for July delivery fell 0.1 percent to $1.4165 a pound on ICE.

White, or refined, sugar for delivery in August rose 0.2 percent to $497.70 a ton in London. Raw sugar for delivery in July fell 0.6 percent to 17.71 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.


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