(Bloomberg) -- Cocoa futures extended their gains on Thursday as buyers took advantage of the dip in prices.
“Nigeria, Cameroon, Ecuador are all in the middle of their harvesting season and have been hedging cocoa into the market,” said Jonathan Parkman, deputy head of agriculture at London-based futures and options brokerage Marex Spectron Group. “Prices have fallen to a level where the industry is willing to come in and extend cover.”
The London active cocoa contract rose as much as 1.1% to 1,721 pounds ($2,306) a ton. Cocoa in New York rose 0.4%.
While commodities from wheat to aluminum have soared this year amid rebounding demand and supply-chain issues, cocoa has been relatively stable. Burgeoning expectations for a second bumper harvest in main growers Ivory Coast and Ghana have weighed on prices in recent weeks.
“While global output in 2021/22 is expected to fall from the record levels seen last season, we still expect it to be high historically,” Warren Patterson, head of commodities strategy at ING said in a note. “Therefore, inventories and 2021/22 output should ensure that demand this season is easily met, without putting significant upside pressure on prices.”
Elsewhere arabica coffee futures rose by as much as 1.6% after another sizeable drawdown in exchange inventories.
Prices for dollar-denominated commodities could be capped by a stronger U.S. currency as a Bloomberg index for the dollar hit its highest in a year yesterday as inflation concerns boosted market expectations the Federal Reserve will raise interest rates.
©2021 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
