London cocoa edges higher as sterling weakens

Parvez Jabri September 2, 2019

LONDON: London cocoa futures were slightly higher on Monday, boosted by the weakness of sterling, although the prospect of another large crop in Ivory Coast in the upcoming 2019/20 season continued to keep a lid on prices.

New York-based cocoa, arabica coffee and raw sugar contracts were closed on Monday for a US public holiday.

COCOA

* December London cocoa rose 7 pounds, or 0.4%, to 1,716 pounds a tonne by 1156 GMT, edging away from a 3-1/2-month low of 1,684 pounds set on Friday.

* The British pound weakened on Monday as traders braced for a clash between the government and lawmakers opposed to Prime Minister Boris Johnson’s Brexit plans as parliament returns this week from its summer recess.

* The favourable crop outlook in Ivory Coast has been a key factor in the recent decline in prices.

* “The now consistent reports of good growing conditions in Ivory Coast, which make an early start and another high crop likely in 2019/20, are depressing the cocoa price,” Commerzbank said in a market note.

* The International Cocoa Organization (ICCO) on Friday estimated there will be a global cocoa surplus of 18,000 tonnes in the 2018/19 season, which runs from October to September, down from a previous forecast of 36,000 tonnes.

SUGAR

* October white sugar rose $2.80, or 0.9%, to $304.40 per tonne. The front month had dipped to a 1-1/2 month low of $301.00 on Friday.

* Dealers said short-term fundamentals remained bearish but the scope for a rebound if funds were to start covering a large net short position in raw sugar was providing some support.

* Speculators hiked their net short position in raw sugar on ICE Futures US in the week to Aug. 27 to its highest in nearly 3 months, US government data showed on Friday.

* “The action since then suggests the short has only grown larger, and is quite possibly now at record levels,” analyst Tobin Gorey of Commonwealth Bank of Australia said in a note.

“Investors exiting from that position is going to be a big event for the sugar market. In our view though the trigger for that buying is still some way off.”

COFFEE

* November robusta coffee was down $5, or 0.4%, at $1,329 per tonne.

Copyright Reuters, 2019

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