By Julie Wernau
Cocoa futures brushed new multiyear lows on Wednesday after a deal was reached to end an army mutiny in the world's largest cocoa-growing region.
Traders had been concerned that two days of violence in Ivory Coast could escalate and lead to supply disruptions in the region.
Cocoa for March fell 3.6% to settle at $2,127 a ton on the ICE Futures U.S. exchange, at one point dropping as low as $2,106 a ton to the lowest intraday low since April 4, 2013.
"There will be no disruption of cocoa coming out of the country," said Nick Gentile, managing partner at NickJen Capital Management.
Analysts are anticipating a surplus of cocoa this year as weather in West Africa, home to the most production, has been favorable for the development and now harvest of the larger main crop.
Dry weather has prevailed across the cocoa areas in West Africa in recent days, according to MDA Weather Services, which will favor the main crop harvest but could put some stress on the smaller midcrop in the spring.
Next Thursday, North America is scheduled to report the tonnage of cocoa beans processed in the fourth quarter. Rotterdam-based trader Cocoanect is anticipating a strong boost to cocoa consumption in 2017 with a 3%-4% boost in grindings of beans because of lower cocoa prices and an improving macro environment.
The firm said it should put an end toward a trend of "shrinkflation," in which chocolate firms have been shrinking the size of bars to reduce the impact of high commodity prices.
In other markets, raw sugar for March was up 0.4% to settle at 20.56 cents a pound, arabica coffee rose 9% to $1.49 a pound in the March contract, frozen concentrated orange juice futures for March closed up 0.6% at $1.839 a pound and March cotton slumped 0.1% to close at 73.14 cents a pound.
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(END) Dow Jones Newswires
January 11, 2017 16:03 ET (21:03 GMT)
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