LONDON: Cocoa futures on ICE rose on Friday but remained some way off recent peaks as investors expect demand to head firmly south and supplies to improve thanks to benign weather.
Coffee fell but remained underpinned by worries over adverse weather, especially in top producer Brazil. September London cocoa rose 1.2% to $6,470 a metric ton by 1234 GMT, but remained some way off its June peak of 8,294 a ton.
Dealers noted increasing signs of demand heading lower. Kitkat maker Nestle lowered its sales growth outlook on Thursday because consumers have become increasingly cost-conscious. Citi said improved weather in top producing region West Africa bodes well for the 2024/25 main crop, adding high prices should prompt farmers the world over to invest in their crop and expand plantations. It sees New York cocoa averaging $6,500 in the fourth quarter, down from $7,750 in the third. September New York cocoa rose 2% to $7,964 a ton.
September arabica coffee fell 1.4% to $2.3020 per lb, having hit a near three-week low of $2.2750 on Thursday. Weighing on prices was the increased pace of harvesting in top producer Brazil, thanks to recent dry weather. Citi, however, said it has revised down this season’s output forecasts for both Vietnam and Brazil due to poor weather, and now expects the global market to record a surplus of just 100,000 60kg bags in 2023/24.
It sees arabica averaging $2.45 in the third quarter, 10 cents higher than its previous forecast. * September robusta coffee fell 1.4% to $4,332 a ton.
October raw sugar fell 1% to 18.47 cents per lb, having settled 4.2% on Thursday after data showed top producer Brazil produced far less than expected in the first half of July.
Citi said below normal rainfall in top producer Brazil points to a weaker crop yield, which could see output decline by 2 million tons in 2024/25. It sees raw sugar averaging 19.50 per lb in the third quarter and 20 per lb in the fourth. October white sugar fell 1.2% to $525 a ton.
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