Cocoa Falls as ICCO Sticks to Shortage Forecast; Coffee Advances

Jan 29, 2014 6:32 am ET

Jan. 29 (Bloomberg) -- Cocoa fell from the highest level since 2011 after the International Cocoa Organization stuck to its shortage estimate for last season. Coffee advanced.

While preliminary data last week from the London-based ICCO showed inventories declined 310,000 metric tons to 1.51 million tons in the season ended Sept. 30, it underestimated beans in transit and stockpiles in locations that don’t report their figures, the ICCO said in a statement e-mailed yesterday. The group said yesterday it decided to maintain its end-of-season stockpiles forecast at 1.672 million tons and its deficit forecast at 160,000 tons for 2012-13. The numbers may be revised at the end of next month.

“The fact that the ICCO decided to stick to its shortage forecast can explain the price decline today,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. “However, prices are still much higher than they were before the preliminary stockpiles estimate.”

Cocoa for delivery in March slid 0.8 percent to 1,819 pounds ($3,012) a ton by 11:15 a.m. on NYSE Liffe in London. Prices rallied as much as 1.3 percent yesterday, touching 1,853 pounds, the highest for a most-active contract since September 2011. In New York, futures for delivery in the same month slid 0.8 percent to $2,882 a ton on ICE Futures U.S.

Futures rose 21 percent in New York last year partly on speculation dry weather would damage crops in West Africa. The commodity, 2013’s second-best performer in the Standard & Poor’s gauge of 24 raw materials, also gained as demand rebounded. Macquarie Group Ltd, Australia’s biggest investment bank, forecasts a shortage of 105,000 tons for 2013-14.

Bean Deliveries

Bean deliveries to ports in Ivory Coast were estimated at 1.036 million tons from Oct. 1 to Jan. 26, according to data from KnowledgeCharts, a unit of researcher Commodities Risk Analysis in Bethlehem, Pennsylvania. That’s 22 percent higher than the same period a year earlier and represent the biggest arrivals since at least the 2004-05 season, the data showed.

Farmers in Ivory Coast will probably reap 1.55 million tons of cocoa in 2013-14, up from 1.47 million tons a year earlier, estimates Amsterdam-based trader Continaf BV. The nation is currently harvesting its main crop and moisture is ensuring “favorable” development to the mid-crop, the smaller of two annual harvests that usually runs from April to September, said the trader, which has a factory in Abidjan.

Robusta coffee for delivery in March rose 0.6 percent to $1,731 a ton in London. Arabica coffee for delivery in the same month advanced 0.4 percent to $1.151 a pound on ICE.

White, or refined, sugar for delivery in March was 0.9 percent lower at $405 a ton on NYSE Liffe. Raw sugar for the same month dropped 0.9 percent to 14.88 cents a pound on ICE.

--Editors: John Deane, Claudia Carpenter