Robust demand supports cocoa. arabica volatile

Robust demand for the key chocolate-making ingredient continued to support cocoa, with benchmark ICE September futures touching a three-year high of $3,239 a tonne on Aug.4 before closing at $3,194. At midweek, ICE September cocoa remained near the three-year peak, settling at $3,225 a tonne and up $21.5 on the day. Liffe December cocoa similarly touched a three-high – of £2,011 a tonne – on Aug. 4 and at midweek closed not far below this level at £2,002 a tonne.

Arabica coffee futures remained volatile as continued uncertainty persisted over the size of top grower Brazil’s crop.  The past three weeks  have seen concerns re-ignite that crop losses this season could be at the top end of the initial forecasts circulating in April. Worries about the 2015-2016 Brazilian crop also have been gathering pace amid unseasonable rains which has led to some instances of early flowering.

On Aug. 1, the benchmark September arabica coffee contract on ICE Futures U.S. jumped as high as $2.074 a pound, the strongest level since late April. Short-covering and buying subsequently eased back, eroding gains, with September arabica settling  the day at $1.9235. Producer selling and profit-taking continued to see gains  pared further in the early days of this week, with September arabica  dipping to close at $1.8828 a pound on Aug. 5. But by finish on Aug. 6, the September contract was back to settle at $1.9213.

Reflecting the tightening supply outlook,  Rabobank in its latest Agri Commodities report raised its third quarter ICE arabica price forecast by 10 cents a pound to 185 cents from a month ago. The bank also revised upwards its fourth quarter forecast to 190 cents a pound.

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