Cocoa Climbs to Three-Month High as Fortis Signals Supply Drop

By Marianne Stigset

Nov. 27 (Bloomberg) -- Cocoa gained to the highest in almost three months on speculation that dwindling supply will push the market into a deficit. Robusta coffee and white sugar also rose.

Cocoa production will outpace demand by 21,000 metric tons in the 2008-09 season, less than half what was expected a month ago, because of output cuts in Africa and Asia, Fortis said in an e-mailed report today. The bank reduced its estimate for production in the period to 3.71 million tons, from the 3.76 million tons forecast in October, Fortis said.

“This is a slim margin by any standard and -- so relatively early in the season -- could easily slip back into deficit if adverse weather at the turn of the year were to impact West Africa’s mid crops,” Fortis analyst Ricardo Santos wrote in the report.

Cocoa for December delivery rose as much as 25 pounds, or 1.6 percent, to 1,615 pounds ($2,497) a ton, the highest since Sept. 1, and traded at 1,611 pounds as of 11:30 a.m. on London’s Liffe exchange. Cocoa gained 11 percent last week, the biggest jump since September 2001, and has climbed 55 percent this year.

Cocoa futures for March delivery jumped $78 yesterday, or 3.6 percent, to $2,221 a ton on ICE Futures U.S. in New York. The market is closed today for the Thanksgiving Day holiday. Cocoa traded in New York has been the only gainer in the UBS Bloomberg CMCI Index of 26 commodities this year.

Black Pod

Ivory Coast’s cocoa crop may “barely reach” 1 million tons this season as disease and rainfall crimp output, Ali Lakiss, director of cocoa exporter Saf-Cacao, said last week. Black pod, a fungus that causes cocoa pods to rot, and adverse weather are affecting plantations, Lakiss said.

The Ivorian state-run Coffee and Cocoa Management Committee said on Oct. 5 that poor quality coffee and cocoa beans wouldn’t be exported.

Cocoa production in Indonesia, the world’s third-biggest grower of the chocolate ingredient, may also miss forecasts, Fortis said.

“If supply uncertainty exists, right now the focus ought to be on Indonesia rather than West Africa,” Santos said. “Some long-standing observers of the Indonesian cocoa sector are concerned that aging trees and disease will significantly erode the current season’s output from Sulawesi.”

Among other agricultural commodities, robusta coffee for January delivery rallied $46, or 2.3 percent, to $2,013 a ton in London. White sugar for March delivery climbed $5.30, or 1.6 percent, to $322.90 a ton.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net