Cocoa Declines in London as Plunging Oil Curbs Commodity Demand

By Rachel Graham

Aug. 5 (Bloomberg) -- Cocoa fell for a second consecutive day in London after a plunge in crude-oil prices curbed demand for commodities as an alternative investment to stocks and bonds.

Crude oil traded at $119.22 a barrel on the New York Mercantile Exchange, as of 1:09 p.m. in London. That's 19 percent below the record reached July 11. The Reuters/Jefferies CRB Commodity Index yesterday fell the most since March.

``Cocoa is taking its lead from crude oil,'' Jamie Craggy, a dealer at One Financial, an online brokerage specializing in commodities, said by phone from London. Declines in oil are ``bound to have an impact on other commodities,'' he said.

Cocoa for September delivery fell as much as 51 pounds, or 3.4 percent, to 1,450 pounds ($2,834) a metric ton on the Liffe exchange in London. The contract traded at 1,458 pounds as of 1:06 p.m. local time.

Cocoa slid 6.3 percent yesterday, the biggest one-day decline compared with closing prices since July 17, 2006. Cocoa rose to as much as 1,800 pounds a ton in London on July 1, the highest since at least 1989, partly on concerns farmers wouldn't ship enough to fill a global shortage.

Ivory Coast, the world's biggest cocoa producer, got 9.7 percent more of the crop at its main ports so far this season than a year earlier, government official Saint-Cyr Djikalou said in an interview in London yesterday.

Deliveries to ports, a gauge of production, rose to 1.27 million metric tons between Oct. 1, 2007, and July 13 this year, The figure was 1.15 million tons a year ago. The country's main ports are San Pedro and Abidjan.

White, or refined, sugar for October delivery fell for a second session, trading down $5.50, or 1.4 percent, at $373.40 a ton on Liffe.

Sugar Funds

ETF Securities Ltd., a provider of contracts tracking commodities, said ETFS Sugar, which tracks sugar futures contracts, lost $3.1 million in investment last week.

ETFS Short Sugar, which investors buy to bet on a drop in prices, attracted about $300,000 in the week to Aug. 1, Jersey, Channel Islands-based ETF Securities said in a report today.

Robusta coffee for September delivery rose $10, or 0.4 percent, to $2,355 a ton. The contract earlier traded as low as $2,335 a ton.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.