Cocoa Steady as Market Pauses After Recent Gains; Wheat Firms

Neena Rai

  Cocoa futures were steady in early European trading Tuesday as the market

took a pause after the recent strong gains buoyed by weather concerns in West

Africa and higher demand, while European wheat futures edged higher.

  At 1015 GMT, December cocoa futures traded 0.1% higher at 1,705 pounds

($2,733.56) a metric ton. Last Tuesday, futures hit a one-year high of GBP1,729

a ton.

  Francisco Redruello, senior food analyst at market research firm Euromonitor

International in London, said concerns over the size and quality of West

Africa's main crop have supported the recent rally.

  "The increase in consumer confidence over the last year has supported

chocolate demand, in particular dark chocolate which is more intensive in cocoa

beans," said Mr. Redruello.

  "With cocoa stock levels at Liffe not exactly brimming, prices will need to

stay high to encourage greater production amongst the second-tier producing

countries, as well as to ration grindings. As stocks start getting drawn down

over the next two seasons, we see cocoa remaining an outperformer in 2014,"

said Macquarie Bank in a report.

  November European Union wheat futures ticked 0.1% higher to 187.25 euros

($253.08) a ton, with gains capped by a stronger euro and high production

levels of the grain in the Black Sea region.

  Wheat prices in Russia were steady or rose slightly last week, the farm

markets research firm SovEcon said Monday.

  The average producer gate price of grade 3 milling wheat increased by 50

rubles ($1.57) to RUB7,175/ton including value-added tax. The price of grade 4

milling wheat stayed at RUB6,675/ton. The price of grade 5 feed wheat increased

by RUB25 to RUB5,750/ton.

  Elswehere, robusta coffee futures consolidated from the prior session's

losses. November robusta coffee futures traded 0.1% higher at $1,689 a ton.

Brokers said price gains continue to be limited by weakness in New York's

arabica market and by expectations of a bumper crop out of Vietnam.

  December Liffe sugar futures traded 0.2% higher at $486.80 a ton,

consolidating from the prior session's sell-off.

  "The initial sell-off seemed driven by the latest CFTC (Commodity Futures

Trading Commission) report, which showed speculative investors hold a modestly

large net long position, despite the relatively subdued fundamental outlook.

Nevertheless, there was little fresh fundamental news over the weekend to

justify the sell-off, which might help explain why prices recovered throughout

the session," said Luke Mathews, analyst at Commonwealth Bank of Austrailia.