Cocoa prices hit 6-month top, despite weak North America grind

North American cocoa processors ground 125,263 tonnes of beans in the July-to-September quarter, a rise of 0.7% year on year, according to data overnight from the National Confectioners Association.

The figure was well short of market expectations of a 2-3% rise, with some traders having forecast a rise of up to 5%, Agrimoney was told.

However, cocoa futures rose nonetheless, with London's December contract touching £1,615 a tonne at one point, a four-month high, and taking the lot above it 200-day moving average for the first time in nearly a year.

In New York, the December cocoa contract rose to $2,160 a tonne, its highest since late March.

However, both contracts rereated amid broad ag sector selling, and closed 0.3% lower, at £1,592 a tonne in London, and $2,138 a tonne in New York.

'Not a lot of cocoa available'

The gains were attributed in part to ideas that one-off factors could be behind the disappointing data, with some talk ahead of the statistics that currency factors may have played a role.

"Keep in mind that the US dollar was in a downtrend for much of the third quarter, which could have a dampening impact on North American grindings," Hightower Report said on Thursday.

Some cargos of Ecuadorian beans were also rejected by US officials during the quarter over claims of contamination with itchgrass, listed by Washington as a noxious weed banned from importation.

This when there is "not a lot of cocoa available" in the US, a New York trader told Agrimoney.com, flagging a retreat of more than 800,000 bags over the past two months in stocks certified for delivery against New York futures.

Asia, chart support

Disappointment at the North American data was also eased by data on the Asian grind in July-to-September quarter which, at 189,407 tonnes, rose 12.9% year on year to the highest ever quarterly figure, data from the Cocoa Association of Asia showed.

The data compile statistics from Malaysia, Singapore and Indonesia, which are becoming increasingly important processing centres as confectionery groups attempt to tap growing Asian demand for cocoa products.

The trader also flagged signs of "more short-covering by system funds", which are being tempted to close out by signs that futures may be poised to recover further from a low which in New York saw spot futures in June touch their weakest in nigh on 10 years.

"Futures are trading above all their moving averages. System funds have been buying the last couple of weeks. It looks like they are doing more today."

Source : Agriculture