Cocoa Rises After Bullish Inventory Data
By Amrith Ramkumar
Cocoa prices rose for the third straight session Friday following International Cocoa Organization data showing a smaller-than-expected addition to the global supply surplus in 2016-17.
Cocoa for March delivery climbed 1.3% to $1,986 a ton on the ICE Futures U.S. exchange. Prices have rebounded from a recent downturn after they briefly pierced $2,000 last week.
The ICCO said it estimates that the global cocoa inventory increased by 144,000 tons from a year earlier, a much smaller figure than the previous projection of 335,000 tons, potentially easing some investor worries about a supply glut limiting price gains.
"The lower-than-expected inventory addition is likely to support prices," ING analysts said in a note to clients.
However, the ICCO also said its survey results probably underestimate the inventory increase because of stocks held in locations that don't report to its survey.
A weaker dollar was also supporting commodity prices again Friday, as the U.S. currency declining makes dollar-denominated commodities cheaper for overseas buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, fell 0.4%.
Investors will be waiting to see if cocoa can sustain a rally above $2,000, with prices still well below their November peaks on oversupply fears.
In other markets, March raw sugar added 0.9% to 13.36 cents a pound, March arabica coffee was up 1.2% at $1.2515 a pound, March frozen concentrated orange juice advanced 0.1% to $1.4980 a pound and March cotton fell 1.7% to 80.48 cents a pound.
(END) Dow Jones Newswires
January 26, 2018 15:18 ET (20:18 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.