Cocoa traded near the lowest level in almost three weeks in London on speculation demand will start to slow, leading investors who bet on higher prices to sell some of their futures. Sugar retreated.
The cost of cocoa butter, which accounts for 20 percent of the weight of a chocolate bar, slid to a ratio of 2.6 to 2.7 times the futures on NYSE Liffe. That’s down from 2.74 on Sept. 27, the highest since 2008, according to KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem, Pennsylvania. Investors more than doubled bets on higher prices in London this year. In New York, trader holdings’ reports will start being published again today after a government shutdown.
“With a large fund long position and improving weather conditions, the market is ripe for correction, particularly heading into the weekend,” Sterling Smith, a futures specialist at Citigroup Inc., said in a report e-mailed yesterday.
Cocoa for delivery in March was little changed at 1,703 pounds ($2,758) a ton by 11:46 a.m. on NYSE Liffe in London. The price touched 1,697 pounds, the lowest for this contract since Oct. 7. Cocoa for delivery in December was unchanged at $2,686 a ton on ICE Futures U.S. in New York. Futures trading volumes were 15 percent lower than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Cocoa grindings, an indication of demand, are recovering as chocolate consumption picks up, especially in developed countries. Processing gained 4.7 percent in Europe in the third quarter from a year earlier and 8.2 percent in North America, according to data from the European Cocoa Association in Brussels and the National Confectioners Association in Washington. Sales by The Hershey Co. (HSY:US), maker of Kisses, gained 6.1 percent in the third quarter, driven by volume, the company said yesterday.
Some observers say that may be “the last batch of ‘good news’ for the demand side in the near term,” Eric Sivry, head of agricultural options brokerage at London-based Marex Spectron Group, said in a report e-mailed today, referring to Hershey’s earnings. “Combine this with the recent strong arrivals in Ivory Coast and hey presto, you have a bearish argument in hand!”
Cocoa bean deliveries to ports in Ivory Coast, the world’s largest producer, more than doubled to 106,000 tons in the Oct. 1-20 period, data on KnowledgeCharts showed. That compares with 47,000 tons in the same period a year earlier.
Robusta coffee for delivery in January fell 0.2 percent to $1,579 a ton on NYSE Liffe. Arabica coffee for delivery in December gained 0.5 percent to $1.109 a pound on ICE.
Refined, or white, sugar for December delivery fell 0.4 percent to $500.20 a ton in London. Raw sugar for delivery in March declined 0.6 percent to 18.86 cents a pound in New York.
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