(Bloomberg) -- Cocoa futures slumped to the lowest since Aug. 8 on optimism that the upcoming main crop harvest will bring more supplies to the global market.
The most-active contract in New York sank as much as 6.2% to $6,819 a ton, extending the prior session’s 5.2% drop. Better weather in West Africa is expected to help the region’s production partly recover from this season’s poor harvests that drove record prices and deficits. Still, futures are likely to remain above historical levels as other challenges like disease persist.
“The main crop is evolving quite well,” said Luca Zaramella, chief financial officer of Mondelez International Inc., the maker of Oreo cookies and Toblerone bars. There are still “a few weeks to go, so we can’t declare that the crop is going to be good yet for sure, but all indicators are there.”
Zaramella, speaking at the Barclays Global Consumer Staples Conference on Wednesday, added that there will most likely be a “further adjustment still to come when the crop really becomes available.”
Meanwhile, robusta coffee futures rose by as much as 3.2% to $4,861 a ton, as exchange stockpiles remain low and concerns over Vietnam’s output linger. Traders are also monitoring erratic weather in Brazil, where dryness has stressed coffee crops.
Above-average temperatures are expected to continue Wednesday, but an incoming cold front is expected to bring a rapid change in the south of Brazil, Climatempo meteorologist Nadiara Pereira wrote in a note. While there is no forecast for significant rains in coffee-producing areas like Minas Gerais, the weather pattern should increase humidity and cool temperatures, Pereira added.
Rainfall in Brazil should improve heading into the final months of the year, and “the level of improvement in states like Minas Gerais and Espirito Santo will probably be a big focus for traders,” said John Goodwin, a senior commodity analyst at ArrowStream Inc.
--With assistance from Deena Shanker.
©2024 Bloomberg L.P.
