London cocoa hits 3-month low amid stocks overhang, weak demand

LONDON: London cocoa futures on ICE hit three-month lows on Monday, under pressure from rising stocks and weak demand, while coffee and sugar headed higher.

COCOA

London cocoa fell 2.6 percent to £3,920 a metric ton at 1306 GMT, after hitting a three-month low of £3,891. The contract is under pressure from lacklustre chocolate demand growth, as reflected in poor chocolate maker earnings, and from the relentless rise in exchange stocks to 2-1/2-year peaks.

While smaller crops are expected in top growers Ivory Coast, Ghana and Ecuador this season due to the El Nino weather pattern, some market players are starting to question the extent of the damage. Broker ADMIS noted parts of West Africa are set to receive enough rain this week to temporarily increase soil moisture.

“It’s possible the hype about the Super El Nino is getting a bit thin,” it said. Cocoa arrivals at ports in Ivory Coast stood at 55,000 metric tons in the week ending November 8, exporters estimated, down 48.6 percent from the same week last year.

New York cocoa fell 2.4 percent to USD5,138 a ton after setting a four-month low of USD5,096.

SUGAR

Raw sugar rose 1 percent to 18.43 cents per lb, recovering after hitting a one-month low of 18.13 on Friday. Sugar, like cocoa, might be starting to view bullish supply news as priced in for now, said ADMIS.

It is also under pressure from a weak Brazilian real, while physical demand is not great - Brazil exports in October were 21 percent down at 3.25 million tons.

White sugar gained 2.4 percent to USD514.10 a ton. Some 250,000 tons of sugar is expected to be delivered when the front month contract expires on Friday, in line with averages.

COFFEE

Robusta coffee rose 0.7 percent to USD3,292 a metric ton, having slumped last week to a 2-1/2-year low of USD3,140. Citi raised its view for top grower Vietnam production by 2 million bags.

The bank said it remains bearish on arabica. Arabica coffee slipped 0.5 percent to USD2.7030 per lb, matching Friday’s one-month low of USD2.6850.