Cocoa Ends at 6-Week Low; Arabica Coffee Slides 3.4%

Leslie Josephs

  NEW YORK--Cocoa prices ended at a six-week low Wednesday, as traders prepared for

larger-than-expected supplies of the chocolate ingredient this year.

  The cocoa contract that expires in December fell $19, or 0.6%, to $3,146 a ton on the ICE Futures

U.S. exchange. It was the lowest closing price for the most actively traded cocoa contract since

July 22.

  Prices have dropped 2.5% since the International Cocoa Organization revised its forecast from a

supply shortfall to a surplus last week. Cocoa production will likely outpace demand by 40,000

metric tons in the season that ends Sept. 30, the London-based industry group said, compared with

its previous forecast for production to fall short by 75,000 tons.  Worldwide, cocoa production will

likely reach a record 4.345 million metric tons this season, the ICCO said, up 4.4% from its

previous forecast and 10% more than last season.

  Traders are likely taking profits from bets that prices would rise, but prices are set to rebound,

said Hector Galvan, senior market strategist at RJO Futures in Chicago.

  "The news from last week on the surplus in cocoa could also be a contributing factor," he said,

referring to the sell-off. "Nonetheless, this is still a bull market and I would not be quick to

turn my back to it."

  Cocoa futures last month rose to the highest point in more than three years, amid strong demand

for chocolate. Globally, retail chocolate sales will likely hit a record 7.3 million metric tons

this year, according to market-research firm Euromonitor International.

  In other markets, cotton for December rose 1% to 65.96 cents a pound. In a weekly report released

after the market closed on Tuesday, the U.S. Department of Agriculture rated 50% of the U.S. cotton

crop as "good" or "excellent" in the week ended Aug. 31, down one percentage point from the previous

week. The report was released Tuesday instead of Monday because of the Labor Day holiday.

  Arabica coffee for December ended down 3.4% at $2.0230 a pound, after rising to a four-month high

in the previous session. It was the largest one-day percentage drop for the most actively traded ICE

coffee contract since Aug. 19.

  Orange-juice concentrate for November was 0.3% higher at $1.4940 a pound, while October raw sugar

was 1.3% lower at 15.62 cents a pound.