cocoa futures brokers

cocoa futures brokers

January 7th, 2016

Cocoa futures continued to plummet, amid volatile and high volume trading, amid ongoing uncertainty about West African production prospects.

Front-month cocoa futures fell nearly 3% in morning deals in New York, to $2,898 a tonne, extending gains this week nearly to 10% .

The selldown, which has taken prices 15% below a five-year high a month ago, contrasts with a strong performance by the bean last year, over which it was one of the few commodities to post gains.

Gains of 10% in New York over the year, and  of 14% in London, made it “the outstanding soft commodity in 2015,” Ecobank said.

Cocoa Futures: ‘Clouded with uncertainty’

The bank also noted that prospects for cocoa production in West Africa, which is responsible for the majority of world output, were “clouded with uncertainty”.

Port arrivals in from the Ivory Coast, the world’s top grower, are lagging last year by 2.4%.

“The slowdown in deliveries is the end result of poor rains in the first half of 2015, which stunted pod development,” said the Togo-based bank.

Ecobank said that the early strength in cocoa arrivals was in part the result of farmers holding back beans from the previous season, in order to cash-in on boost to the government supported farmgate prices.

Cocoa Futures: ‘The flush of the harvest’

But others have downplayed the slowness of the deliveries.

“We’re about 20,000 tonnes behind last year,” a New York-based trader told Agrimoney.com, “but we had a record crop last year. 20,000 tonnes is not a lot of cocoa.”

“I think a lot of the hedge funds bought into the story of the deficit for this year,” he said, “but we won’t know how much is being produced for a while.”

“This is the flush of the harvest,” he added. “This is the time of year when you see a little price pressure because there are more beans available.”

Cocoa Market: Stale news

Aside from the port arrivals, there has been little fresh news in the market.

“The markets been trading off of stale news,” the trader said. “It’s been the same story in cocoa for over a month.”

Next week will see the release of quarterly data on cocoa grinding, a proxy for demand, in the US and Europe.

The data will give an insight into how demand was faring during a period of very-high cocoa prices.

Cocoa Prices: ‘Throwing in the towel’

And a stormy macroeconomic environment, particularly recent concerns around Chinese economic prospects, added pressure.

Chocolate is a luxury good, and remains highly exposed to consumer spending patterns.

“I think the market just got a little bit ahead of itself, and with the macro news around, they’re throwing in the towel,” the trader said.

“It’s called risk management.”

March cocoa futures in New York were down 1.5% at $2,937 a tonne in late morning deals.

- Agrimoney.