Cocoa price falls on speculation Ghana is selling crop
Cocoa dropped in London on speculation growers in Ghana, the world’s second-largest producer, increased sales of their latest crop to take advantage of this month’s price gains. Sugar and coffee advanced.
Ghana’s production will rise 4.3 percent to 720,000 metric tons in the season started Oct. 1, even as output from the Ivory Coast, the largest grower, declines, according to a Fortis report on Dec. 22. Cocoa has climbed 11 percent this month as prospects for a global supply deficit lured investors.
“I would think Ghana has done some selling into this rally,” said Jeff Cooper, a trader at Fortis in London. “They wouldn’t miss an opportunity to do that.”
Cocoa for March delivery fell 49 pounds, or 2.7 percent, to 1,783 pounds ($2,621) a metric ton on London’s Liffe exchange. Prices have advanced 71 percent this year, heading for the biggest annual jump since at least 1990.
Prices will probably resume their gains as Ghana can’t make up for a 4 percent decline in output forecast in the Ivory Coast, Cooper said. Cocoa may advance to 2,000 pounds by the end of January, buoyed by investor demand, he said.
Ivory Coast and Ghana, which make up 58 percent of global supply, face drier weather, possibly harming prospects for the smaller of two annual crops that will be harvested early next year, according to Fortis.
“The market at the moment is holding pretty well compared to other commodities because of its own fundamentals,” Stephanie Garner, a trader at Sucden Financial in London, wrote in a report today. There are “tight supplies in West Africa.”
Inventories of cocoa in warehouses monitored by Liffe have increased 6.5 percent this year while they are down 30 percent in warehouses monitored by ICE Futures U.S. in New York.
Robusta coffee rose $10 to $1,800 a ton and white, or refined, sugar gained 70 cents to $308.50 a ton.
Investors may sell 40,000 to 45,000 raw sugar futures over the next month to match a re-weighting of sugar in commodity indexes such as Dow Jones-AIG and Standard & Poor’s GSCI, David Sadler, manger of the sugar desk at Sucden, said. That’s at least 16 percent of open interest in the March raw sugar futures on ICE Futures.
Commodities trading is closed tomorrow for Christmas and a public holiday on Dec. 26.