AFKI Commodities Report: Winners And Losers Of 2014

Written by Lynda Davies

Lower year-on-year to date bean arrivals at the West African producer’s ports were also helping prices. Reuters quoted exporter estimates of a 15 percent decline in arrivals by Dec. 28 since the start of the season on Oct. 1 at 756,000 tonnes against 890,000 tonnes in the same period in 2013.

ICE cocoa futures for March gained $23 to settle at $2,964 a tonne on Dec. 29 but had eased back to close the year at $2,910 a tonne. In London, March cocoa finished 2014 at £1,980 a tonne, some £6 down on the day.

Front-month cocoa in London, nevertheless, ended 2014 up 14 percent year-on-year while ICE cocoa gained 7 percent. This marked the key chocolate-making ingredient’s third year of gain.

Losing streak for sugar & cotton

In sharp contrast to arabica coffee and cocoa, sugar and cotton traded at multi-year lows as 2014 drew to a close.

Large global stocks continue to weigh heavily on world sugar prices with benchmark ICE raw sugar futures finishing 2014 at a three-month low, and close to 12 percent down on 2013’s finish. 2014 was raw sugar’s fourth year of annual decline.

A weakening real against the U.S. dollar, which encourages Brazilian producer selling in dollar-traded commodities like sugar in that it boosts local currency returns, is also further pressuring prices.

March raw sugar on ICE Futures U.S. dipped to a contract low of 14.47 cents a pound on Dec. 31 before settling at 14.52 cents, 0.09 cents down on the day. The front-month contract closed 2013 at 16.41 cents a pound.

March white, or refined, sugar on London’s ICE Futures Europe settled at $391.20 a tonne on Dec. 31, $4.10 up on the day, and managing to hold above the contract low of $383 a tonne recorded on Dec. 17. March white sugar is now around 13 percent down on its 2013 close at $449 a tonne, and, like raw sugar, has now seen four straight years of annual decline.

The sweetener will continue to face strong headwinds according to Rabobank.

“The principal driver of these price developments has been the continued weight of global sugar stocks on the market,” said the bank in its Sugar Quarterly Q4 2014 report, published Dec. 23. “This is currently expected to diminish only modestly over 2015.”

At this stage, Rabobank said, global production in the 2014-2015 international crop year appears not to have responded significantly to low prices, though – it added – plenty of time remains for revisions to forecasts for important countries.

Cotton at five-year low

Cotton was one of the worst performing agricultural commodities of 2014, with benchmark ICE futures in New York shedding close to 29 percent of their value to trade at their lowest level in five years in late November. ICE march cotton closed 2014 at 60.27 cents per pound, some 24.34 cents down on its 2013 finish at 84.64 cents. On 21 Nov., the front-month contract (at the time, December) had dipped to a five-year low of 57.84 cents a pound but since then has managed largely to stay above 60 cents a pound.

Huge global stocks and sharply lower imports by top consumer and importer China following Beijing’s decision to scrap its cotton stockpiling program in favor of direct subsidies to the country’s farmers have weighed heavily on global cotton markets in recent months. 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.

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.