Cocoa Rises on Expectations Demand to Rise, Weakness in Dollar

By Yi Tian

Oct. 3 (Bloomberg) -- Cocoa rose in New York on expectations sales of the chocolate ingredient will pick up during the holidays and as the falling dollar increases the appeal of the commodity for buyers holding other currencies.

Cocoa demand tends to increase toward year-end, said Stephanie Kinard, a broker with JKV Global in Chicago. The dollar lost as much as 0.6 percent today against a basket of six major currencies, including the pound. Cocoa is traded in pounds in the U.K. and West Africa, the biggest cocoa exporting region.

``We may see some near-term positive momentum as we approach the holidays in spite of an economic slowdown,'' Kinard said. ``The rule of falling greenback and rising pound applies to today's market.''

Cocoa futures for December delivery rose $18, or 0.7 percent, to $2,469 a metric ton on ICE Futures U.S. Still, cocoa fell 10 percent this week, the biggest such decline since the week ended March 21.

In the third quarter, the most-active contract tumbled 20 percent, the most since the first quarter of 1992.

Cocoa ``has been a bit oversold,'' which also helped to explain the gains today, Kinard said.

The price may fall as low as $2,445, now that the six- month low of $2,496 reached on Sept. 15, was breached, according to Michael Ragazzo, the president of MBL Commodities Ltd. in New York.

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.