LONDON: Cocoa futures on the ICE exchange hit a four-month low on Monday, with the market still pricing in unexpected forecasts for a surplus this season, but with dealers warning of oversold conditions.
Raw sugar rallied meanwhile, and coffee steadied
Cocoa
London cocoa was 2.8% lower at 6,354 pounds per ton by 1307 GMT, having hit its lowest since early November at 6,182.
Cocoa is on the defensive following the International Cocoa Organization’s surprise projection that the market will record a surplus of 142,000 tons in the current 2024/25 season.
Dealers said cocoa was technically oversold however, with much of the ICCO forecast banking on reduced consumption in response to high prices, rather than improved production.
Cocoa arrivals at ports in top grower Ivory Coast were up just 14.8% from the season start to March 9 versus the same period a year ago, when the crop was devastated by adverse weather and disease.
ICE New York cocoa speculators cut their net long position by 502 contracts to 5,367 in the week to March 4, while ICE London cocoa speculators cut their net long position by 4,131 lots to 12,593 lots, data showed.
New York cocoa fell 2.2% to $8,112 a ton, having lost 9% last week.
Cocoa tumbles after ICCO forecasts a surplus, while coffee recovers
Sugar
Raw sugar futures rose 3.3% to 18.92 cents per lb, after falling 6% last week.
Sugar is being driven by diminishing production outlooks in India and Thailand, as well as drier-than-normal weather in top grower Brazil.
Limiting gains is a potential increase in Mexican sugar to the international market as a result of U.S. tariffs, dealers said.
White sugar rose 2.1% to $536.10 a ton.
Coffee
Arabica coffee rose 1% to $3.8825 per lb, having gained 3% last week.
Dry conditions in top producer Brazil remained a concern, but these have been priced in to an extent and fears are now emerging over the impact of high prices on demand, dealers said.
Global coffee traders and roasters say they have cut purchases to minimal levels as the industry reels from a steep price surge that suppliers have yet to convince retail stores to accept.
Robusta coffee rose 0.8% to $5,396 a metric ton.
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