Cocoa prices rose on Tuesday, with an increase in grindings expected to diminish the size of any global surplus this season, while arabica coffee regained some ground after a recent slide. March New York cocoa was up $24, or 1.2 percent, at $2,114 a tonne by 1515 GMT, buoyed by further evidence that grindings are increasing.
Ivory Coast cocoa grinders had processed 45,000 tonnes of beans by the end of October, the first month of the new season, up 15 percent on the same month of last year, data from the exporters' association GEPEX showed on Tuesday. Cocoa grindings have also been rising in Europe, Asia and North America. Rabobank said in a report on Tuesday that it forecast global grindings to rise by 2.3 percent in 2017/18 after an increase of more than 4 percent in 2016/17.
"This is rather optimistic, but processor margins remain very high, mainly due to the strength of the butter ratio," the bank said in a report on the outlook for 2018. Production in Ivory Coast is also expected to be significantly below last season's record, leading to a more balanced global market in 2017/18 after a large surplus in the previous season.
Rabobank forecast a global surplus of 130,000 tonnes in 2017/18, down from 300,000 tonnes the previous season, adding that its very preliminary forecast for 2018/19 was a surplus of 60,000 tonnes. "These surpluses look smaller than they did two months ago, but large stocks should prevent spikes in prices," it said. March London cocoa rose by 11 pounds, or 0.7 percent, to 1,585 pounds a tonne.
March raw sugar fell by 0.02 cents, or 0.1 percent, to 14.95 cents per lb. Dealers said the market was on the defensive after a rally driven by fund short-covering appeared to run out of steam. "A close below 15 cents again this evening will probably suggest a test of 14.5 (cents)," Tom Kujawa, co-head of the softs department at Sucden Financial, said in a market note.
March white sugar rose by $0.20, or 0.05 percent, to $389 a tonne. March arabica coffee rose by 1.75 cents, or 1.4 percent, to $1.2750 per lb. The rally followed a recent slide, with the market last week recording its poorest weekly performance since late September. Dealers said the potential for a record crop in Brazil next year could limit the scope of any price rebound.
Rabobank on Tuesday forecast there would be global surplus of 3 million bags in 2018/19, the vast majority in arabicas, compared with a deficit of 4.7 million bags in 2017/18. January robusta coffee was off $4, or 0.2 percent, at $1,806 a tonne.