Feb. 17, 2005
Bloomberg
Cocoa rose to a one-week high in New York on concern that supply will tighten as inventory drops and farmers collect a smaller crop in the Ivory Coast, the world's biggest grower.
Inventory in U.S. warehouses monitored by the New York Board of Trade fell 1.3 percent, the fifth straight daily decline. Global demand from processors, including Hershey Foods Corp. and Nestle SA, will exceed bean production by 144,000 metric tons in the season that ends Sept. 30, the first supply deficit in three years, ED&F Man Cocoa Ltd. said in November.
``There is a slight tightening of stocks, which is a little supportive'' for prices, said David Hightower, president of the Hightower Report, a Chicago-based research company.
Cocoa futures for May delivery rose $14, or 0.9 percent, to $1,599 a metric ton at 10:24 a.m. on the New York Board of Trade. A close at that price would be the highest since Feb. 8 and the biggest price change among the 17 U.S. commodities tracked by the Reuters-CRB index. Prices were 3.7 percent higher than this time last year.
Production in the Ivory Coast, which supplies about 40 percent of the world's cocoa, was expected to fall in the current crop year to 1.27 million metric tons, down 8.4 percent from last year's record, London-based ED&F Man Cocoa said in a report in November.
Chocolate demand, which traditionally peaks in the U.S. during the Easter holiday next month, has been rising.
Rising Cocoa Demand
Food companies ground 403,914 metric tons of cocoa last year, the most since 438,380 tons were processed in 2001, according to figures from the Chocolate Manufacturers Association, an industry group based in Vienna, Virginia.
Cocoa processing in the fourth quarter climbed 3.3 percent from a year earlier, the fourth consecutive quarterly gain, the association said.
Inventory of cocoa beans in U.S. exchange-approved warehouses stand at 1.9 million bags, each weighing 145 pounds.
A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.
To contact the reporter on this story:
Claudia Carpenter in New York at ccarpenter2@bloomberg.net.
To contact the editor responsible for this story:
Steve Stroth at sstroth@bloomberg.net.
http://www.bloomberg.com/news/markets/commodities.html