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.
