Cocoa prices are pushing lower as the harvest in West Africa is proceeding more smoothly than traders anticipated and no major weather events have disrupted the developing, smaller mid-crop.
Cocoa for March delivery dropped 2.9% to $2,785 a ton on the ICE Futures U.S. exchange.
The Ghana Cocoa Board, the country’s cocoa marketing arm, has launched several initiatives to increase production: distributing free fertilizer and seedlings and mass spraying, according to ICCO. In Ivory Coast, the world’s largest producer, cocoa beans are arriving at ports at a slightly slower pace than last year.
“The short-term trend-following funds are getting short,” said Nicholas Gentile, managing partner and head trader at NickJen Capital Management & Consulting LLC in New York. “Some people are saying we could have a balanced market. It’s not bullish.”
Mr. Gentile said also weighing on prices is the fact that two of the largest cocoa buyers in the world have said they don’t see a bullish picture this year for cocoa and in the short-term cocoa buyers are well stocked for the Easter season.
Some traders placed bullish bets ahead of Harmattan season in West Africa. The yearly strong winds affect West African-growing regions, lowering soil moisture, damaging the development of pollinated flowers and bringing cooler temperatures that can disrupt the fermentation process.
WeatherBELL Analytics in New York said in a note that last year, cool air from the Middle East pumped up a ridge of high pressure over the Sahara and helped enhance the January 2015 Harmattan. The same scenario occurred again last month but for only brief periods in what is normally the driest month.
In other markets, arabica coffee for March delivery rose 1.2% to $1.191 a pound, raw sugar futures for March fell 1.1% to 12.69 cents a pound, March cotton slumped 0.3% to 61.62 cents a pound and frozen concentrated orange juice futures were up 1.5% at $1.3625 a pound.
