Fund speculation sends cocoa to 14-year high
markets.ft.com
Speculative buying sent cocoa futures to their highest in more than 14 years on Thursday.
Fund buying in London pushed Liffe July cocoa to a peak of £1,280 a tonne, the highest for a second position contract since September 1987. It settled at £1,279 a tonne, £45 above Wednesday's close, despite some profit-taking and further selling from Ghana.
Cocoa prices began their rally in November 2001, when the second month was hovering around £750 a tonne - some 70 per cent below current levels.
Forecasts of a global supply deficit for the second year running, along with expectations of a smaller crop in leading grower Ivory Coast triggered the price hike.
But the market then took a knock when analysts downgraded their estimates for the supply deficit in 2001/02 from about 250,000 tonnes to around 150,000 tonnes, due to a sharp drop in consumption by cocoa processors.
Although prices have fallen away from their peaks over the past two months, dipping to £1,170 a tonne on April 10, most traders and analysts remain bullish. They say operators are wary of selling the market, while offers from origin have been sharply reduced this crop season as Ivory Coast no longer sells forward and Ghana, who does, is thought to have oversold this year's crop.
In New York, Coffee Sugar and Cocoa Exchange (CSCE) July cocoa futures reached a contract high of $1,598 a tonne on what floor brokers called a huge surge of speculative buying. The contract settled at $1,595 a tonne, up $57 on the previous close.
On the crude oil market, Venezuelan Minister of Energy and Mines Alvaro Silva said Opec was not planning to raise production quotas at its June meeting.
But, after steep falls on Wednesday, prices remained lacklustre. July Brent crude closed 5 cents higher at $26.22 a barrel in London. In New York, July WTI ended the session down 20 cents at $27.95 |
