Cocoa gains on crop delay concern, coffee drops

Cocoa fell on Thursday amid speculation next harvest in the worlds biggest growing region will be delayed due to unfavorable weather.

On NYSE LIFFE in London, cocoa futures for July delivery traded at $1 497 pounds per ton, up 1.49% on the day. Prices ranged between days high and low of $1 503 and $1 479 respectively. Cocoa settled more than 1.5% higher yesterday, extending this weeks gains above 4% after settling 1.48% higher last week. Trading is closed on ICE Futures U.S. in New York because of the Independence Day holiday.

MDA Services in Gaithersburg, Maryland reported on Tuesday that weather in eastern Ivory Coast, the leading producer, is dry and more rain is needed in the second largest producer, Ghana. Moderate rain is expected this week.

Kyle Tapley, a meteorologist at MDA, said in a report for Bloomberg: “Some dryness has developed across east central portions of Ivory Coast, which may stress development of the main cocoa crop. Some dryness is also a concern across west central portions of Ghana.”

Barry Callebaut AG, the biggest maker of bulk chocolate said sales surged by 8.2% in the nine months ending May due to increased demand from emerging markets. Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt commented: “It seems that prices recently benefited from solid demand figures as shown by Barry Callebauts earnings.”

Robusta gains

Meanwhile, robusta coffee for September delivery advanced 0.55% on the day, trading at $1 819 a ton at 12:35 GMT. Prices held in range between $1 821 and $1 804. Robusta settled 0.8% lower yesterday, but is marking a 3.3% weekly gain after settling 1% higher last week.

Robusta rose to the highest in three weeks on Tuesday amid speculation prices fell last quarter too much, while stockpiles in Europe declined and premiums in growing countries were high. The sort that is mainly grown in Vietnam fell 14% between April and June, which is the worst quarter since Q3 2011. Meanwhile, stockpiles, monitored by the NYSE LIFFE, fell by 1.3% in the two weeks to June 24.

Meanwhile, arabica lost more than 2.14% on the ICE Futures U.S. yesterday as the cheaper Brazilian currency gave growers a competitive advantage on the markets, which spurred sales. Growers in Brazil are unloading beans in order to clear storage for the next harvest. The real dropped 9.4% during the second quarter, the most among 24 emerging-market countries, causing the worlds biggest producer to sell more on account of Peru. Peru, the third biggest South America arabica grower, sold 31% less coffee during the first five months of the year as buyers switched to Brazil due to its cheaper currency. Colombia, the second biggest arabica grower, increased its export by 32% as the peso fell 7.1% against the U.S. dollar.

Rasmus Wolthers, a trader at Wolthers & Associates in Santos, Brazil, said for Bloomberg: “The lower real will most certainly help exports, making Brazil a much more aggressive seller. There’s a lot of coffee in Brazil, and there isn’t enough space to store it all, so producers will have to sell. I expect to see much more aggressive sales offers.”

Arabica coffee prices fell to a three-year low of $1.1717 a pound on June 20 amid concerns over ample global supplies. Both coffee sorts were under pressure recently as favorable weather conditions boosted prospects for crop development in the world’s top two producers and exporters of the two sorts – Brazil and Vietnam. According to the International Coffee Organisation, the 2012-2013 arabica production in most countries will jump 5.7%, and robusta output will rise by 8.8%.

Meanwhile, on the NYSE LIFFE white sugar for August delivery declined 0.18%, trading at $496.50 a ton at 12:36 GMT. Prices ranged between days high and low of $500.55 and $495.70 respectively. The sweetener marked a minor 0.3% gain yesterday but is still marking more than 1% decline this week after gaining 1.08% last one.

Last week, Kingsman SA, a unit of McGraw-Hill Financial Inc.’s Platts, said for Bloomberg global sugar surplus might be 4% lower than previous estimates due to reduced output in Australia and Ukraine. Kingsman increased its forecast for sugar production in Belarus, South Africa and El Salvador. India may also produce more of the sweetener than forecast, up to 23-24 million tons for the 2013-2014 year from 22.3. Global sugar surplus is expected to be more than forecast in the 12 months ending in September and might total 11.87 million tons, above the previous 11.8 million tons estimate.