Cocoa futures jumped in New York as dry weather in the world’s top producers’ fuels concerns about output in the upcoming season.
The most-active contract rose as much as 9.3%, on course for a weekly gain of about 10%. Parts of West Africa saw little rain in the past week and dry conditions are expected to persist, reducing soil moisture needed for crop growth, according to forecaster Maxar.
However, despite the current weather fears, analysts expect a recovery in West Africa’s cocoa production in the season starting October, helping flip the market into a surplus.
“The market may have drawn support this week from a dry trend in West Africa, but the outlook for the upcoming main crop is mostly positive,” ADM Investor Services wrote in a Thursday note.
Meanwhile, arabica coffee fell in New York as traders continue assessing the risk of frost in top producer Brazil that pushed markets higher earlier this week.
“Should frost risk prove to be minimal as the charts indicate, the coffee markets may seek a correction on the downside,” said Thiago Cazarini, president of Cazarini Trading Co. “But if a Brazil frost strikes this market, we could see coffee prices climbing to rival all-time highs.”
Credit: bloomberg.com
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