Price differentials in the European cash cocoa market eased this week as rains in top producer Ivory Coast improved its mid-crop outlook and dealers sold long positions. Ivory Coast differentials were about 80 pounds ($130) over London nearby cocoa futures contracts, compared with 95 pounds last week. Ghana differentials were 125 pounds over London nearby cocoa futures, the same as last week's.
"The news we are getting is bearish," one trader said. "That has created a lot of pressure on people with long positions to sell." On Wednesday ICE cocoa futures reached the lowest level in three months as abundant rain fell in Ivory Coast's key western cocoa-producing regions, raising hopes for the mid-crop after several weeks of dry conditions.
"Improved prospects for the interim harvest in Ivory Coast, which takes place between April and September, caused the price of cocoa to plummet to its lowest level since the beginning of January," Germany's Commerzbank said in a note on Thursday. "Rainfall in Ivory Coast is currently normal for the time of year, and further rain is forecast over the next few days." Cocoa futures on ICE were higher on Thursday as the market regained some ground. "The industry is well covered," another trader said.
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