By Julie Wernau
Cocoa futures dropped sharply Monday after a report on the positioning of traders indicated that the already-bearish stance for the contract could continue to grow.
Cocoa for September tumbled 4.6% to end at $1,934 a ton on the ICE Futures U.S. exchange, dropping to its lowest level since May 26. Cocoa futures have seen volatile trade over the last month but haven't managed to break above $2,088 a ton since April 5.
"There just hasn't been a huge decrease in the number of net shorts in cocoa. That gives you an idea that it might move lower," said Peter Mooses, senior market strategist at RJO Futures in Chicago.
Cocoa has struggled to move higher amid an expected surplus of beans, along with sluggish growth in demand.
This month, the International Cocoa Organization raised its forecast for the 2016-17 season, indicating a surplus of 382,000 tons versus a previous estimate of 264,000 tons, as supplies of beans swell in Ivory Coast, the world's largest grower.
"With the cocoa supply being up almost 25% for the past six months and chocolate prices reportedly tumbling because of oversupply, it is not looking good for a near-term rebound for cocoa prices. This might set up for [commodity trading advisers] to start selling into this market and start taking a short position in cocoa. We could also see producers to start selling risk in case of another global bumper crop for the next harvest cycle," said Michael Kerensky, a trader at RJ O'Brien in New York.
In other markets, raw sugar for October was up 0.3% to end at 13.67 cents a pound, arabica coffee for September rose 0.5% to settle at $1.266 a pound, frozen concentrated orange juice for July was down 1.9% to end at $1.39 a pound, and December cotton lost 0.5% to close at 69.04 cents a pound.
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(END) Dow Jones Newswires
June 19, 2017 17:58 ET (21:58 GMT)
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