LONDON: Cocoa futures on the ICE exchange edged up off two year lows on Monday as dealers went bargain hunting in an oversold market that lost nearly 20 percent of its value last week.
Cocoa demand has fallen sharply this season in response to the price surge seen over the last two years, with chocolate makers reformulating recipes and bar sizes to limit bean usage.
COCOA
New York cocoa rose 2.2 percent to USD4,290 a metric ton at 1124 GMT, after plumbing a two-year low of USD4,054 last week. It lost 17percent for the week as a whole.
Broker StoneX said the market was oversold but that even so, it expects any rally to be short-lived as selling from producing countries will likely put the brakes on any recovery.
Stocks are said to be building up in top producers Ivory Coast and Ghana due to the lack of cocoa demand just as the current crop is being harvested amid benign weather.
Saxo Bank said the fall in cocoa prices “increasingly reflects demand destruction rather than supply relief”. It noted that top global chocolate maker Barry Callebaut, which processes about a fifth of the world’s cocoa beans, reported a 22percent first quarter sales volume drop in its cocoa trading unit.
London cocoa rose 1.8percent to 3,061 pounds per ton after setting a two-year low of 2,916 last week. It closed down 19percent for the week as a whole.
COFFEE
Robusta coffee was steady at USD4,140 a ton, after setting a six-week high of USD4,212 last week. Top grower Brazil’s 2026 output of conilon, a robusta coffee variety, will be lower than last year as the plant is in the ‘off year’ of its biennial crop cycle.
Brazil’s instant coffee industry is meanwhile seeking details on why it continues to face a 50percent US tariff even after import charges were lifted on most of the country’s other US-bound coffee shipments. Instant coffee is produced largely with robusta beans. Arabica coffee rose 1.6percent to USD3.5665 per lb.
SUGAR
Raw sugar edged up 0.1 percent to 14.74 cents per lb, having lose 1.5percent last week. White sugar was down 0.7percent to USD415.90 a ton.