Soft futures mixed, cocoa drops as concern over unfavorable weather eased

Soft futures were mixed on Wednesday with sugar and coffee marking daily gains, while cotton and cocoa declined.

On the ICE Futures U.S. Exchange, cocoa futures for September delivery traded at $2 225.50 a ton at 13:41 GMT, down 0.51% on the day. Prices held in range between days high and low of $2 235.50 and $2 209.50 a ton respectively. Futures remained closed fairly unchanged on Friday and settled the week 1.7% higher as unfavorable crop developing conditions in main growers spurred concerns over output.

Cocoa dropped on Monday as grinding in Europe, an indication for demand, rose by 6.1% in the second quarter according to the European Cocoa Association. This was lower than the 8.3% increase according to a Bloomberg survey among analysts. According to ECA, in the three months from April to June 310 408 tons of cocoa beans were processed, compared to 292 551 tons during the same period last year. However, this was lower than this years first quarter when bean processing amounted to 339 377 tons.

Jonathan Parkman, co-head of agriculture at futures and options brokerage Marex Spectron Group Ltd. said for Bloomberg: “The ECA grind was marginally worse than expected, but with the non-reporting factories, it’s really hard to gauge what’s actually going on. Allowing for the non-reporters, we estimate the grind is actually up about 10 percent on the same quarter, which is a pretty decent performance really.”

Meanwhile, last week cocoa beans drew support by unfavorable weather conditions in some of the main growers Ivory Coast and Ghana, where lack of rains threatened to reduce the second of the two annual crops, the so called main crop. However, AccuWeather Inc. said in a report on July 12 that thunderstorms were expected from Ivory Coast eastward to Nigeria and Cameroon through yesterday, which eased concerns over drought.

Jonathan Parkman commented: “A combination of slightly weaker European grind and the fact that it’s been raining in Ivory Coast probably got the market on the defensive this morning.”

Coffee gains

Both coffee sorts gained on Monday. On the ICE Futures Exchange, arabica coffee for September delivery traded at $1.2045 a pound at 13:41 GMT. Prices held in range between days high and low of $1.2068 and $1.1865 a pound respectively. The C contract made a steep 3.42% plunge on Friday, erasing previous weekly gains and settling 1.3% lower on the week.

Meanwhile on the NYSE Liffe, robusta coffee for September delivery hit a new daily high at $1 893 a ton at 13:32 GMT, up 1.01% on the day. Days low stood at $1 854 a ton. Robusta settled 0.5% lower on Friday but still marked a strong weekly gain, advancing 3.7%. Prices were well supported as rainfall was expected to delay growing in the world’s third biggest grower, Indonesia. In the same time, farmers were holding back supplies, waiting for prices to jump.

Elsewhere on the market, sugar October futures gained 0.19% on the day, hitting a new daily high at $0.1611 a pound at 13:36 GMT. Days low stood at $0.1604, the lowest since July 2. The sweetener lost 0.3% on Friday, extending last weeks decline to 1.05% after settling 3.9% lower the preceding one.

Meanwhile, on the ICE, cotton December futures lost 0.10% on the day, trading at $0.8500 a pound at 13:39 GMT. Prices held in range between $0.8513 and $0.8453. The fiber marked a minor gain on Friday but settled the week 0.11% lower.