Bloomberg News

Investors Cut Bullish Cocoa Bets to 7-Week Low on Ivory Arrivals

January 06, 2014

Money managers cut bullish bets on cocoa traded in London to the lowest level in seven weeks as bean arrivals to top producer Ivory Coast surged, according to data from NYSE Liffe, the derivatives arm of NYSE Euronext.

Investors were net-long, or betting on higher prices, by 65,414 futures and options as of Dec. 30, the Commitments of Traders report on the exchange’s website showed today. That compared with 68,275 contracts a week earlier and was the smallest bet on rising prices since Nov. 12. Bullish bets reached a record in the week ended Dec. 3. The beans used to make chocolate advanced 4.2 percent in the week.

Bean deliveries to ports in Ivory Coast were estimated to have risen 41 percent from the start of the season on Oct. 1 through to Dec. 29, according to KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem, Pennsylvania. Arrivals were probably 903,000 metric tons in the period compared with 639,000 tons a year earlier, data from the researcher showed.

“Ivorian port arrivals have been very strong,” Sholom Sanik, an analyst at Friedberg Mercantile Group Ltd. in Toronto, said in a report e-mailed on Jan. 2. “Commodity funds have been long this market for quite some time, but after spiking to new highs in November, the market has stagnated. Anticipation of bearish revisions to the balance sheet could spark a broad liquidation, which may have already begun.”

Cocoa futures are little changed this year after rallying 21 percent last season on speculation supplies would fall short of demand in the 2013-14 season that started Oct. 1. That would be a second year of shortages, according to the International Cocoa Organization in London. Prices were at 1,734 pounds ($2,841) a ton by 12:49 p.m. in London after reaching last year’s high of 1,809 pounds a ton on Dec. 24.

Harmattan Winds

“The challenge for the balance of the main-crop harvest, which extends through March, is the Harmattan winds, which can dry the soil, depriving crops of much-needed moisture,” Sanik said. “The winds have been mild over the past few weeks, however, and the market has responded with a sharp sell-off.”

The Harmattan are dry and dusty winds from the desert, typical for December through January, which can damage crops in West Africa.

In white, or refined sugar, investors extended bets on falling prices to the highest level since June 18, NYSE Liffe data showed. Money managers were net short by 791 futures and options as of Dec. 30 after turning bearish a week earlier. The sweetener gained 1 percent in the period.

Investors trimmed bets on higher robusta coffee prices to 8,894 futures and options, the data showed. That compares with 9,706 contracts a week earlier. The beans used to make instant coffee and espresso fell 0.6 percent in the period.

In feed wheat, money managers were net-short by 159 contracts, unchanged from a week earlier. The grain fell 0.8 percent in the period.

NYSE Liffe reported data as of Dec. 30 this week and as of Dec. 23 a week earlier, a day before the usual cut-off date, due to the end-of-year holidays.

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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