Yahoo Finance Cocoa Heads for Longest Decline in Two Years on Rainy Weather
(Bloomberg) -- Cocoa headed for the longest run of losses in two years in New York as focus turns to favorable weather that could aid crops in crucial West African growers.
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Futures fell as much as 2.3% on Thursday, heading for a sixth session of declines on optimism that rains in Africa will support the current mid-crop and next season’s output. Crops will continue to develop amid “more showers and favorable soil moisture,” according to forecaster Maxar Technologies Inc.
Poor harvests have fueled a global supply crunch and pushed cocoa above $11,000 a ton this year. While futures prices have since eased — heading for the first quarterly loss in two years — the market remains volatile amid a lack of liquidity, with prices recording big swings this week.
“Cocoa is sliding in expectation of a production rebound next season and reduced purchases when prices were sky high,” said Judy Ganes, the president of J. Ganes Consulting. But the market can still “can have some teeth to it for a corrective bounce up if the weather doesn’t cooperate.”
Despite the recent price slump, worries about shortages continue to loom.
“Sellers may have gotten ahead of themselves, as there really was not any news this week to change the status quo, except for a lack of new threats to the crop that would bring in new buyers,” analysts at ADM Investor Services wrote in a note.
Pierre Andurand, the hedge fund manager best known for oil wagers, remains bullish even as prices have retreated from their peak, according to a letter to investors seen by Bloomberg. Andurand Capital Management is still “very convinced” in its “long cocoa thesis,” noting tight supplies and stronger-than-expected demand.
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