Cocoa Erases Gain in London on Increased Production in Cameroon

By M. Shankar

Jan. 22 (Bloomberg) -- Cocoa erased gains in London, after advancing yesterday to the highest since at least 1989, on increased production in Cameroon, the world’s fifth-largest grower of the beans.

Cameroon’s only cocoa-processing firm, SIC-Cacao, handled 22,025 metric tons of beans in the current crop season’s first five months, an e-mailed report from the Cocoa and Coffee Board and the Cocoa and Coffee Interprofessional Council shows. That was more than in the entire prior season.

Cocoa had opened higher after sterling sank yesterday to the weakest since 1985 against the dollar on concern recession will deepen in the U.K. Declines by the pound reduce the cost of buying London-traded cocoa for holders of other currencies. The beans had advanced 11 percent in two days at yesterday’s close, helped by figures released Jan. 20 showing that Ivory Coast shipments dropped 14 percent from a year earlier in December.

“Given the market fundamentals, you can’t rule out further gains,” said Stephanie Garner, a cocoa trader at London-based broker Sucden Financial Ltd. “After everything that London has done, we’re finding pressure for some form of breath-taking. But it will ultimately only add strength to further moves on the upside.”

Cocoa for March delivery fell 9 pounds, or 0.5 percent, to 1,971 pounds ($2,712) a ton on the Liffe exchange at 12:40 p.m. local time, wiping out a climb of as much as 0.5 percent.

The beans gained 71 percent in London last year, the most since at least 1990, on concern a decline in the Ivorian crop would dent global supply. Cocoa is the only commodity in the UBS Bloomberg CMCI index to have gained in the past year.

Cocoa for March delivery fell $3, or 0.1 percent, to $2,599 a ton on ICE Futures U.S. in New York.

Robusta coffee for March delivery climbed $18, or 1.1 percent, to $1,698 a ton on Liffe, and white sugar rose 20 cents, or 0.1 percent, to $349.20 a ton.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net