By Julie Wernau

Cocoa prices dove to a fresh three-year low on Thursday as a battered pound and developing cocoa crop pushed long-only funds out of the market.

Cocoa for March delivery dropped 1.4%, to $2,378 a ton, on the ICE Futures U.S. exchange, on track for its lowest close since Aug. 6, 2013.

"This is not bull the market it had been for the last few years. It's the opposite," said Peter Mooses, senior market strategist at RJO Futures in Chicago.

Europe is the biggest consumer of chocolate in the world and global cocoa contracts have dropped precipitously since the U.K. vote to exit the European Union this June. The London contract is down 13% since the vote and the New York contract is now down 25%.

The pound has dropped 15% against the dollar since Brexit and market participants are pushing prices lower on the idea that the weaker currency, along with economic uncertainty in Europe, will drag on demand for chocolate.

The Ivory Coast and Ghana, which produces the bulk of the world's cocoa, are entering main crop harvest, the larger of the two yearly crop cycles. Ghana cocoa bean purchases have been robust so far, said Price Futures Group in Chicago, but Ivory Coast arrivals are so far below expectations.

Traders said some long-positioned funds decided not to roll over positions into the March contract and instead exited those positions or placed short positions during the rollover time period. The U.S. Presidential election led some funds to flee agricultural commodities for the safety of precious metals.

Data on fund positioning will be released Friday at the U.S. Commodity Futures Trading Commission.

In other markets, raw sugar for March was up 0.4%, to 20.45 cents a pound; arabica coffee for March fell 0.3%, to $1.6385 a pound; frozen concentrated orange juice for January was down 0.2%, at $2.086 a pound; and March cotton edged higher, up 0.2%, at 71.83 cents a pound.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

November 17, 2016 11:45 ET (16:45 GMT)

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