AFKI Commodities Report: Oil Prices Hit New Lows After OPEC cuts 2015 Forecast

Written by Lynda Davies

The  stockpiling scheme made it cheaper for Chinese companies to import the fiber rather than buy home-grown product and over the three years it was in place provided significant support for world cotton markets and prices. The USDA currently is forecasting China’s cotton imports to more than halve to some 7 million bales in 2014-2015 from an estimated 14.12 million bales in 2013-2014 and down from over 20 million bales in 2012-2013.

Cocoa gains, arabica falls to new 4⅟2-month low

Cocoa futures on Dec. 9 climbed to their highest close since late October amid signs of tighter supplies and a weaker U.S. dollar. Cocoa for delivery in March on ICE Futures U.S. hit $2,958 a tonne before settling at $2,952, some $49 up on the day.

In London, cocoa for delivery in the same month on the London-based ICE Futures Europe exchange finished the day £17 higher at £1,949. Cocoa for March delivery on both exchanges eased back to $2,933 and £1,938 a tonne respectively by the close the following day, however.

The market found support on reports of lower year-on-year cocoa bean deliveries so far this season to ports in top grower Côte d’Ivoire.  According to Reuters, bean arrivals at the country’s ports since the start of the season on Oct. 1 totalled 532,000 tonnes as at Dec. 7, down from 609,000 tonnes in the same year-ago period.

A decline to a 33/4- year low of 3.026 million bags on Dec. 8 in  ICE-monitored cocoa inventories and the falling U.S. dollar against other major currencies also helped boost ICE cocoa. As with other dollar-denominated commodities, it is less expensive for buyers using non-U.S. dollar currencies to buy cocoa when the dollar weakens.

Arabica coffee futures, meanwhile, continued to retreat this week amid an improving outlook for 2015-2016 production in Brazil, the top producing country and exporter. The arrival of rains in the country’s key coffee-growing areas in the center and south are seen as positive for the development of the upcoming crop.  Severe drought conditions early this calendar year damaged coffee trees in the main growing regions and impacted this season’s output.

Arabica coffee for March delivery on ICE Futures U.S. touched a fresh 4⅟2-month low of 176.95 cents a pound on Dec. 9, the weakest level for a second-month contract since July. March arabica subsequently trimmed losses to settle at 180.45 cents, up 2.40 cents on the day, but closed lower at 178.55 cents the following day.

Investor selling also weighed on robusta coffee prices. Robusta coffee for January delivery on London’s ICE futures Europe exchange settled at $1,975 a tonne on Dec. 10, after touching a 2⅟2-month of low of $1,963, and a full $63 weaker than last week’s close at $2,038 a tonne.

Raw sugar on ICE Futures U.S. rebounded from the 2⅟2-month lows seen last week as speculators moved back into the market and also finding some support in the falling U.S. dollar. March raw sugar on ICE had climbed to 15.47 cents a pound by close on Dec. 10, 0.05 cents up on the day and a 0.33 cents gain on last week’s close at 15.14 cents a pound. The front month contract dipped to a low of 15.02 cents on Dec. 4, its weakest level since late September.

White, or refined, sugar on  ICE Futures Europe finished marginally up on the week so far on Dec. 10, with the March contract settling at $398.80 a tonne, a $3.7 gain on last week’s finish at $395.10.

While care has been taken to ensure that the information contained in this report is accurate, it is supplied without guarantee. The author can accept no responsibility for any errors or any consequence arising from the information provided.