Cocoa Climbs as Chart Signals Investors Should Buy; Sugar Rises

By Claudia Carpenter

Aug. 1 (Bloomberg) -- Cocoa rose in London as a technical chart used some investors signaled they should buy. Sugar erased an earlier decline.

Cocoa stayed above the 20-day moving average today for the first time since July 3. The last time it went over the indicator, prices climbed to the highest since at least 1989. Cocoa may rise through 2009 as supply falls short of demand, a fourth straight deficit, Macquarie Bank Ltd. said.

``The market opened above the 20-day moving average,'' said Jonathan Parkman, head of agriculture commodities at Fortis in London. ``We're in a small deficit at the moment.''

Cocoa for September delivery rose 34 pounds, or 2.2 percent, to 1,552 pounds ($3,067) a metric ton as of 11:44 a.m. on the Liffe exchange, trading above the 20-day moving average of about 1,511 pounds. The contract has gained 3.3 percent this week.

Cocoa has risen 48 percent this year on speculation that tree disease in producing nations including the Ivory Coast and Indonesia may curb supply.

Cocoa will average $2,790 a ton this year and $2,865 a ton in 2009, Macquarie said in a report e-mailed today by the bank's London-based commodity strategist Kona Haque.

Global production will lag behind demand by 13,000 tons in the year starting October 2009, on top of a deficit of 44,000 tons, according to the report. Supplies have lagged behind demand since the 2006/2007 crop year, Macquarie said.

White, or refined, sugar for delivery in October rose $2.80, or 0.7 percent, to $389 a ton.

Before today, sugar rose 7.4 percent this week after German researcher F.O. Licht said global production may drop for the first time in four years starting in October. Brazil, the world's largest producer, Argentina, Thailand and India sold when prices were this high last month, a Liffe report shows.

``Brazil has loads of it'' to sell, said David Sadler, manager of the sugar desk at brokerage Sucden (U.K.) Ltd. in London. ``The higher the price goes in sugar, the more sugar you'll get.''

Robusta coffee for September delivery gained $10 to $2,418 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net