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cocoa futures

September 5th, 2013

Cocoa futures swung between gains and losses in New York and London as investors weighed speculation of a shortage this season and the return of rains in West Africa, the main producing region. Sugar rose.

Cocoa growing areas in West Africa are forecast to get rains in the next five days, Kyle Tapley, a meteorologist with MDA Weather Services in Gaithersburg, Maryland, said yesterday. Dryness last month threatened to cut output for next season. Slower bean deliveries to Ivorian ports are fueling speculation of a global shortage in the 2012-13 season ending this month.

“We are still looking at a balanced situation for 2012-13, but there was always a risk for a slight deficit,” Kona Haque, a London-based analyst at Macquarie Group Ltd., said by phone today. “If the mid-crop arrivals are tapering off and turn out to be smaller than expected, we may have to revise the 2012-13 balance down.”

Cocoa for delivery in December climbed 0.2 percent to $2,500 a metric ton by 7:36 a.m. on ICE Futures U.S. in New York. It rose as much as 0.7 percent and fell as much as 0.2 percent in earlier trade. Cocoa for delivery in the same month added 0.1 percent to 1,656 pounds ($2,590) a ton on NYSE Liffe in London, after advancing as much as 0.7 percent and declining as much as 0.1 percent.

Ivory Coast is harvesting its mid-crop, the smaller of two annuals harvests. Deliveries to ports were 1.28 million tons from Oct. 1 to June 30, according to the country’s ministries of finance and agriculture. That’s smaller than arrivals of 1.34 million tons estimated by KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem, Pennsylvania on July 2.

Cocoa: Shortage

Cocoa supplies are forecast to be 11,000 tons higher than demand in 2012-13, according to Macquarie. The bank sees a shortage of 119,000 tons for next season. The cost of cocoa butter relative to the price of beans soared to the highest since 2008 in Europe last month, according to three traders with direct knowledge of the sales.

“Demand is strong,” Haque said. “Demand for butter is out there. If there’s any concern over yield or delays to the next main crop, the physical buyers may be looking to get their hands on what they can now.”

Arabica coffee for December delivery gained 0.1 percent to $1.17 a pound on ICE. Robusta coffee for November delivery fell 0.1 percent to $1,776 a ton on NYSE Liffe.

Raw sugar for delivery in October climbed 0.1 percent to 16.40 cents a pound in New York. White, or refined, sugar for delivery in the same month advanced 0.2 percent to $480.90 a ton in London.

- Alex Pashley and Isis Almeida in London at Bloomberg.