Cocoa gains after hitting fresh one month low amid stocks overhang

LONDON: Cocoa futures on ICE rose on Friday after hitting fresh one-month lows earlier amid an ongoing stocks overhang, while raw sugar also hit its lowest in a month.

COCOA

London cocoa rose 1.8 percent to £4,088 per metric ton at 1359 GMT, after hitting a one-month low of £3,948. The contract was heading for a fourth consecutive weekly loss as sluggish demand growth weighs and exchange stocks hit their highest in 2-1/2 years.

Commerzbank noted that smaller crops are expected this season in top three growers Ivory Coast, Ghana and Ecuador, thanks primarily to the strong El Nino weather pattern.

It added the fact that cocoa prices are nevertheless falling “is likely to reflect concerns about demand”. A dealer said recent data showing strong third-quarter ‘grind’ or demand numbers in key consuming regions came about because chocolate makers are restocking, not due to strong demand.

“Chocolate makers are blaming high cocoa prices for disappointing earnings and slow growth,” noted broker ADMIS. New York cocoa rose 1.6 percent to USD5,373 a ton after setting a one-month low of USD5,192.

SUGAR

Raw sugar fell 1.3 percent to 18.33 cents per lb, having hit a one-month low of 18.22. Sugar is under pressure from overall energy price weakness, which tends to prompt cane mills to produce more sugar and less biofuel ethanol.

White sugar slipped 0.2 percent to USD499 a ton * White sugar is focussed on next week’s December contract expiry, where a delivery of about 250,000 tons is anticipated, in line with the contract’s December average.

COFFEE

Robusta coffee slipped 0.2 percent to USD3,232 a metric ton, having slumped last week to a 2-1/2-year low of USD3,140. Robusta is under pressure overall from expectations for a decent harvest this season from top grower Vietnam. Arabica coffee rose 0.3 percent to USD2.7005 per lb, having hit a more than one-month low of USD2.6810 per lb earlier.