Cocoa Gains to 2-Year High on Dollar Amid Shortage; Sugar Falls

By Isis Almeida - Dec 2, 2013 5:58 AM PT

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Cocoa reached a two-year high in New York as the dollar weakened against the pound, triggering buy orders amid forecasts for shortages this season. Raw sugar fell.

Cocoa rose as much as 2 percent to $2,844 a metric ton, the highest since Sept. 14, 2011, on ICE Futures U.S. The pound gained for a fifth day against the dollar after stronger-than-estimated growth in U.K. manufacturing output in November added to evidence an economic recovery is gathering momentum.

“After a strong opening in New York, currency-inspired with the dollar losing further ground against sterling, the start of the new month has seen a continued speculative-led buying surge taking prices back up to levels not seen in two years,” Justin Grandison, director of cocoa brokerage at ABN Amro Clearing Bank N.V., said by e-mail today.

Cocoa for delivery in March added 1.8 percent to $2,837 a ton by 8:29 a.m. on ICE Futures U.S. in New York on trading volume 7 percent higher than the average for the past 100 days for the time of day, according to data compiled by Bloomberg. In London, cocoa for the same delivery month rose 1.6 percent to 1,773 pounds ($2,905) a ton on NYSE Liffe.

Global cocoa supplies will fall short of demand by 162,000 tons in the 2013-14 season, according to KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem,Pennsylvania. That follows a 198,000-ton deficit a year earlier. Money managers were net-long by a record 69,117 futures and options in London cocoa as of Nov. 26, data on NYSE Liffe’s website showed today.

“With limited offers in the early stages today facilitating the rise, we wait and see whether this first move of the month draws out any origin-related selling to provide some element of resistance,” Grandison said.

Raw sugar for delivery in March fell 0.2 percent to 17.12 cents a pound on ICE. Refined, or white, sugar for the same delivery month slid 1.3 percent to $458.20 a ton on Liffe.

“Physical sugar prices remain weak, even though demand appears to have picked up a little,” researcher Kingsman SA in Lausanne, Switzerland, said in a report e-mailed today.

Arabica coffee for delivery in March lost 1 percent to $1.0975 a pound in New York. Robusta coffee for delivery in January dropped 0.2 percent to $1,638 a ton in London.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net