Cocoa swung between gains and losses in London as investors weighed improving prospects for the smaller of two annual crops in Ivory Coast, the world’s largest producer, and declining exchange stockpiles. Sugar fell to the lowest in more than 2 1/2 years.
Cocoa inventories with a valid grading certificate in warehouses monitored by NYSE Liffe were 43,020 metric tons as of Jan. 7, down more than 50% in the past year. NYSE Liffe will update the figures later this week. Rabobank International cut its cocoa price forecasts last week, citing a better outlook for the Ivorian crop. Still, 2012-13 global output will fall about 3% to 3.91 million tons, said Macquarie Group Ltd.
“The expected 3% fall in this season’s output should be manageable due to the large carried-over stock from the last two seasons’ surpluses and poor demand,” Kona Haque, an analyst at Macquarie in London, said in a report e-mailed today. “Certified stocks on Liffe are still trending lower and if we were to get another fall next season, it would be harder to manage and would lead to lower stocks.”
Cocoa for March delivery was 0.1% higher at 1,483 pounds ($2,347) a ton by the close on NYSE Liffe in London. It gained as much as 0.7% and lost as much as 0.5% earlier today. ICE Futures U.S. in New York, where cocoa trades in dollars, was closed for Martin Luther King Jr. Day. Raw sugar and arabica coffee also trade on ICE.
Cocoa for March delivery last traded 3 pounds a ton above the futures for May, a market structure known as backwardation that may signal limited supplies. The March contract switched to being more expensive on Jan. 17, raising concerns that traders may try to take delivery when the March contract on NYSE Liffe expires on March 13 amid low stockpiles.
Cocoa processing in Singapore, Indonesia and Malaysia climbed 2.8% in the fourth quarter to 155,237 tons from the same period a year earlier, the Cocoa Association of Asia in Singapore said on its website today.
White, or refined, sugar for March delivery fell 0.4% to $489.80 a ton on NYSE Liffe, after earlier touching $489.50, the lowest for a most-active contract since July 2010.
India’s sugar harvest “is unexpectedly ahead of last year’s progress, although growers in Maharashtra may have been tempted to push hard early to rescue what they could of a poor crop,” Tom McNeill, a director at Green Pool Commodity Specialists Pty in Brisbane, Australia, said in a report e- mailed today.
Robusta coffee for March delivery fell 0.3% to $1,970 a ton in London.