Cocoa futures in London fell to a five-week low on Monday with the strength of sterling weighing on a market already depressed by improving crop prospects in top producer Ivory Coast and demand concerns, dealers said. A weaker dollar boosted coffee and sugar prices. May cocoa in London stood 44 pounds lower at 1,718 pounds a tonne at 1516 GMT after touching 1,693 pounds, its lowest level since mid-January.
The contract has fallen sharply after rising as high as 2,023 pounds in late January, hurt by a deepening economic crisis as well as improved production prospects. "There is probably a bit more cocoa around than the most bullish people expected and a bit less demand around as well," said Jonathan Parkman, head of agri-commodity brokerage at Fortis Commodity Derivatives.
Parkman said cocoa consumption could come under pressure, particularly in regions such as eastern Europe where it had been a key driver of demand growth. Dealers noted Ivory Coast port arrivals remained well below the previous season after a slow start but estimates for the latest week were above year earlier levels, cutting into the deficit on last year's crop.
Cocoa arrivals at ports in top grower Ivory Coast were around 794,000 tonnes by Feb. 22, exporters estimated on Monday, compared with 978,549 tonnes in the same period of the previous season. Exporters estimated around 20,000 tonnes of beans were delivered to the West African state's two ports between Feb. 16 and Feb. 22, up from 15,228 tones in the same week a year ago.
Dealers said May cocoa in London should find support in the 1,680 to 1,690 pound area. Cocoa prices on ICE were down with May off $27 at $2,403 a tonne, with a weaker dollar curbing further losses. Coffee prices were higher, boosted by a weaker dollar and indications the market may have become oversold after recent weakness. Dealers said holidays in Brazil linked to Mardi Gras celebration may also limit selling pressure. "In the short-term I think the market has got room for a corrective bounce," one dealer said.
May arabica coffee on ICE rose 1.55 cents to $1.1275 per lb while May robustas in London climbed $20 to $1,585 a tonne. Sugar prices also rose on a weaker dollar. May raw sugar on ICE rose 0.08 cent to 13.14 cents a lb while May white sugar in London climbed $1.20 to $393.70 a tonne. Dealers said trade buying was providing support beneath 13 cents a lb, basis May raws, while producer selling was emerging around 13.50 to 13.60 cents.
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