LONDON: Cocoa futures on ICE slid on Monday as speculators trimmed their net long position amid worries over U.S. trade tariffs and Friday’s weak U.S. jobs report.
The Trump administration last week slapped a slew of tariffs on dozens of trading partners, which could raise domestic U.S. prices and hurt demand for goods in the world’s top economy.
Most of the tariffs are set to come into effect on Friday.
Cocoa
London cocoa futures fell 1.6% to 5,298 pounds a metric ton, having hit a one-week low of 5,230.
Shares Barry Callebaut, the world’s top cocoa processor and bulk chocolate maker, slid 4%, with analysts noting the firm is exposed to tariffs as it imports cocoa into the U.S. from countries like Ivory Coast, Ghana and Brazil.
The U.S. Commerce Secretary said last week commodities not grown in the U.S. could be exempt from tariffs if deals with producing countries are reached, but there are many deals yet to be closed.
In the absence of trade deals, tariffs of 15% will apply to top producer Ivory Coast, 10% will apply to No. 2 and No. 3 producers Ghana and Ecuador, while 50% will apply to Brazil.
New York futures fell 1.4% to $7,452 a ton, having hit a two-week low of $7,347.
Coffee, cocoa slip as investors hold out for US tariff relief
Coffee
Arabica coffee futures rose 1.2% to $2.8075 per lb, recovering after hitting their lowest since mid-November on Friday.
Dealers noted comments from Brazilian President Luiz Inacio Lula da Silva that he is still open to U.S. trade talks, and speculated as to whether the weak U.S. jobs report will pressure the U.S. into pulling back some of its tariff threats.
The U.S. is the world’s top coffee consumer and it imports about a third of its coffee from top producer Brazil. Coffee, like cocoa, is a tropical commodity almost entirely unsuitable for growing in the U.S.
Robusta coffee rose 2.6% to $3,343 a ton, having closed down 2.2% on Friday.
Sugar
Raw sugar ??rose 0.8% to 16.31 cents per lb, having settled down 1% on Friday.
French sugar maker Tereos, one of the world’s largest sugar makers, said lower production and sales volumes in Europe could lead to a price recovery later this year.
White sugar rose 0.9% to $469.10 a ton, having settled down 0.6% on Friday.
Pakistan has issued a new international tender to purchase 100,000 metric tons of white refined sugar, European traders said.
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