Cocoa Trades Higher Again as Supply Concerns Loom
Neena Rai
LONDON - Cocoa futures prices gained ground in European trading Monday as
concerns over supply shortages helped extend the increases made in the prior
session.
"Cocoa futures rallied on Friday due to speculation that weeks of heat in
Ivory Coast and Ghana could cause serious crop damage, outweighing the fact
that rain was falling over the largest two cocoa producers of West Africa,"
said Vanessa Tan, investment analyst at Phillip Futures.
"This rise...reversed from previous sessions as it was highly unlikely that
the rain could undo the heat stress experienced by the cocoa crops previously,"
she said. "It remains to be seen if the rainfall could significantly benefit
the stressed cocoa crops."
December cocoa futures traded 1% higher at GBP 1,710 a metric ton at 1025
GMT, after hitting GBP 1,713 a ton--the highest level since Sept. 19.
Elsewhere, November robusta coffee futures firmed 0.8% to $1,722 a ton.
Market sentiment remains positive after a much larger-than-expected drawdown in
certified stocks announced last week.
Certified robusta stocks held in NYSE Liffe-nominated warehouses fell to
60,380 tons as of Sept. 30, down from 74,890 tons Sept. 16.
"The equilibrium price of robusta coffee...is approximately $1,850 per ton in
the short, short term," said Mark Nucera, president of M.A. Nucera consultancy.
"Higher demand this fall or reductions in supply could bring a price closer to
$2,400 per ton considering how tight the robusta market is presently.
"The media has focused on the larger Vietnam Robusta crop as a bearish
indicator. Well, Vietnam's increased crop, if not impacted by the recent
cyclones (which seems highly unlikely), will be offset by a lower crop in
Indonesia available for export and in Africa," he said.
Meanwhile, December sugar futures firmed 0.4% to $494.30/ton, while European
Union November wheat futures nudged 0.1% up to EUR 194.75 a ton, with the
market awaiting further news to any rain damage to CIS-region crops.
