London cocoa near three-year low

Cocoa futures crumbled Tuesday, with London bean values near a three-year low and US cocoa at a 2-1/2 year low, pressured by abundant supplies and by worries that the European debt crisis could spark a recession that would lessen demand for chocolate products. Arabica coffee futures were higher, boosted by diminished crop outlooks in key producers Brazil and Colombia, while raw sugar gained mainly due to a weaker dollar.
"We've got a difficult economic background, particularly in Europe which is the largest single bloc of cocoa consumption, and it is difficult to forecast how European economic difficulties might manifest themselves in the consumption of chocolate," said Jonathan Parkman, joint head of agriculture at brokerage Marex Spectron.
London's March cocoa futures lost 33 pounds, or 2.1 percent, to finish at 1,483 pounds a tonne. The contract had earlier dipped to 1,473 pounds, the lowest level for the benchmark second month since December 2008. March cocoa on ICE fell $44 or almost 2 percent to end at $2,320 a tonne, the lowest settlement for the second position contract since May 2009. The contract hit a session low of $2,287.
The abundant supply is due mainly to a big harvest in Ivory Coast, the world's No 1 producer, and in Ghana, the No 2 grower. The International Cocoa Organisation estimated there was a global cocoa surplus of 325,000 tonnes in 2010/11 although a more balanced market is forecast for 2011/12.
New York's March arabica coffee contract fell 0.25 cent to close at $2.2755 a lb. London's January robusta contract increased $35 or nearly 2 percent to finish at $1,950 a tonne. "The prospect that high-grade Arabica beans in particular will remain in short supply outweighs the fear here of a collapse in demand due to global economic difficulties," Commerzbank said in a daily commodities note. Sugar futures were slightly higher in modest business. ICE March raw sugar futures added 0.37 cent to settle at 23.49 cents a lb. London's March white sugar futures on Liffe added $3.10 to close at $604.20 a tonne.