Cocoa Heads for Biggest Weekly Decline in Four Months in London

By M. Shankar

Feb. 20 (Bloomberg) -- Cocoa headed for its biggest weekly drop in four months in London, falling with other commodities as gains by the dollar curbed raw materials’ appeal as an alternative investment. Robusta coffee and sugar also declined.

The U.S. Dollar Index, which measures the currency against six counterparts, rose for a fourth day this week. Crude oil and industrial metals dropped, tracking shares in Europe, where the Dow Jones Stoxx 600 Index slid to a five-year low.

“The currency, the global macroeconomic situation and the equities position are adding pressure on commodities,” said William Adjadj, a cocoa trader at Sucden in Paris.

Cocoa for May delivery fell 37 pounds, or 2 percent, to 1,811 pounds ($2,592) a metric ton at 12:25 p.m. local time on the Liffe exchange. The beans have dropped 4.9 percent this week, the most since the week ended Oct. 17. The UBS Bloomberg CMCI Index of 26 commodities has slid 7.2 percent this year.

Cocoa for May delivery declined $58, or 2.3 percent, to $2,512 a ton in after-hours trading on ICE Futures U.S.

Bean deliveries to Ivory Coast ports for shipment abroad more than doubled in the week ended Feb. 15, an industry official with access to the information said yesterday. Ivory Coast is the world’s biggest producer of the chocolate ingredient.

Among other agricultural commodities traded on Liffe, robusta coffee for May delivery fell $7, or 0.4 percent, to $1,579 a ton. White sugar for May delivery dropped $4.40, or 1.1 percent, to $389.60 a ton.

Sugar prices may rise 17 percent by the end of the year as falling output in India turns the country into an importer of the sweetener, Commerzbank said today in a report.

Prices in New York may rise to 15 cents a pound this year, analysts Eugen Weinberg, Barbara Lambrecht and Carsten Fritsch wrote. Use of sugar cane to produce ethanol will support demand in the long term, helping to lift the sweetener’s price to 17 cents a pound by the end of 2010, they wrote.

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