LONDON: London cocoa prices on ICE hit a 1-1/2 month high on Wednesday as chocolate makers took advantage of recent price falls to restock, even as they expect demand to tail off going forward thanks to poor global growth.
September London cocoa rose 0.6% to 1,789 pounds per tonne at 1122 GMT, having hit its highest since early June at 1,695.
Dealers said cocoa and chocolate demand has been better than expected to date and that even though it is expected to tail off going forward, concerns are creeping in about next season’s supply from West Africa.
The cocoa crop in the world’s top producing region has been developing well to date but this will not likely be maintained going forward given very little fertiliser was applied this year, they explained.
Barry Callebaut, the world’s biggest chocolate maker, said its sales volumes grew 7.9% in the nine months to end-May thanks to strong demand. It noted however that the global chocolate confectionery market grew only 1.4% during that period.
September New York cocoa rose 0.7% to $2,399 a tonne.
October raw sugar fell 0.4% to 18.76 cents per lb, extending the previous session’s 2.9% decline.
Dealers said it is difficult to see any serious recovery in sugar prices in the short term following the move by Brazilian oil giant Petrobras to cut gasoline prices. Lower energy prices tend to prompt Brazil’s cane mills to ramp up sugar output at the expense of ethanol, a cane-based biofuel.
Dealers said Brazil’s ethanol parity is currently below 16.50, meaning mills will be well served producing and selling sugar rather than ethanol.
October white sugar fell 0.2% to $538.80 a tonne.
September arabica coffee fell 0.6% to $2.1085 with the market consolidating after climbing nearly 8% on Monday.
September robusta coffee fell 0.2% to $1,994 a tonne.