Bloomberg News

Cocoa Gains as Supply May Be Limited Before Expiry; Coffee Rises

May 14, 2013

Cocoa climbed for a second day in London on speculation supplies will be limited before the delivery of the May futures contract this week. Coffee rose.

Cocoa for May delivery was 31 pounds ($47) a metric ton more expensive than the July contract, reversing a discount of 8 pounds a ton a week earlier, exchange data on Bloomberg showed. Backwardation, when prices for near-dated contracts are higher than later ones, may signal scant supply. Trading of May futures ends May 15 and the delivery will take place the next day. There is speculation about limited supplies in European warehouses, Jerome Jourquin, head of agricultural commodity derivatives at brokerage Aurel BGC in Paris, said by e-mail yesterday.

Cocoa price gains are “more closely related to the May expiration in London than much else,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a report e-mailed yesterday. More gains will need to be seen today to confirm a bullish technical trend, he said.

Cocoa for delivery in July rose 0.3 percent to 1,551 pounds a ton by 10:34 a.m. on NYSE Liffe in London and the May contract climbed 0.8 percent to 1,592 pounds. Cocoa for July delivery advanced 0.5 percent to $2,337 a ton in New York.

Cocoa delivered against the March contract totaled 72,350 tons, the most since the December 2010 futures expired. Buyers on NYSE Liffe can take delivery of no more than 75,000 tons, according to limits that came into force before the December futures expired last year. Most of the beans delivered were from top producer Ivory Coast, followed by Cameroon and Nigeria.

White, or refined, sugar for delivery in August was unchanged at $485.10 a ton on NYSE Liffe. Raw sugar for delivery in July was little changed at 17.24 cents a pound on ICE.

Sugar output in Brazil’s center south, the main growing region of the world’s biggest producer, more than tripled in the second half of April to 1.45 million tons, industry group Unica said in a statement e-mailed yesterday.

“The expected acceleration of the Brazilian sugarcane harvest is likely to put some downward pressure on the price structure in the weeks ahead,” F.O. Licht GmbH said in a report dated yesterday.

Robusta coffee futures for July delivery gained 0.5 percent to $2,062 a ton in London. Arabica coffee futures for July delivery were 0.6 percent higher at $1.4665 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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