Cocoa prices drop sharply as coffee and sugar follow
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Cocoa futures saw a steep decline on Wednesday, falling nearly 7% amid index fund rebalancing and supply dynamics. Coffee and sugar markets also experienced losses, although to a lesser extent, as broader concerns weighed on soft commodities.
Cocoa market update
New York cocoa
Prices dropped 6.8% to settle at $10,453 per metric ton, a decline of $757, driven by index funds selling off cocoa to rebalance their portfolios after its strong performance in 2024.
London cocoa
Prices fell 5.5% to £8,515 per ton, mirroring the selloff in New York.
Ivory Coast arrivals
Cocoa arrivals in Ivory Coast reached 1.109 million tons by January 5, significantly up from 873,000 tons during the same period last year. However, dry weather is expected to slow arrivals starting February.
Hershey’s request
Hershey Co. has requested special permission from the CFTC to purchase cocoa stocks beyond ICE exchange limits, according to reports.
Coffee market overview
Arabica coffee
Prices declined 1.3%, settling at $3.1645 per pound, as index fund rebalancing pressured the market.
Concerns about dry weather in Brazil, which could reduce this year’s crop size, provided some support.
Brazilian coffee exports in December fell 17% year-on-year to 3.36 million bags, hindered by limited port capacity.
Robusta coffee
Prices dropped 1.3%, closing at $4,956 per ton, reflecting similar pressures.
Sugar market performance
Raw sugar
Prices fell 1.1%, settling at 19.24 cents per pound, trading within a range of support at 19.04 cents and resistance near 20 cents.
White sugar
March white sugar prices declined 0.8%, closing at $503.70 per ton, as the market remained range-bound.
Market outlook
Cocoa: Index fund rebalancing could continue to exert short-term pressure, but supply concerns from Ivory Coast may provide medium-term support.
Coffee: Brazil’s weather challenges could underpin prices despite temporary selloffs from fund activity.
Sugar: Prices are likely to remain range-bound, with traders watching key support and resistance levels.
Conclusion
Soft commodities faced headwinds as index fund rebalancing led to widespread declines, with cocoa taking the hardest hit. Weather conditions, export dynamics, and supply data will play critical roles in shaping the trajectory of these markets in the coming weeks.
Cocoa market update
New York cocoa
Prices dropped 6.8% to settle at $10,453 per metric ton, a decline of $757, driven by index funds selling off cocoa to rebalance their portfolios after its strong performance in 2024.
London cocoa
Prices fell 5.5% to £8,515 per ton, mirroring the selloff in New York.
Ivory Coast arrivals
Cocoa arrivals in Ivory Coast reached 1.109 million tons by January 5, significantly up from 873,000 tons during the same period last year. However, dry weather is expected to slow arrivals starting February.
Hershey’s request
Hershey Co. has requested special permission from the CFTC to purchase cocoa stocks beyond ICE exchange limits, according to reports.
Coffee market overview
Arabica coffee
Prices declined 1.3%, settling at $3.1645 per pound, as index fund rebalancing pressured the market.
Concerns about dry weather in Brazil, which could reduce this year’s crop size, provided some support.
Brazilian coffee exports in December fell 17% year-on-year to 3.36 million bags, hindered by limited port capacity.
Robusta coffee
Prices dropped 1.3%, closing at $4,956 per ton, reflecting similar pressures.
Sugar market performance
Raw sugar
Prices fell 1.1%, settling at 19.24 cents per pound, trading within a range of support at 19.04 cents and resistance near 20 cents.
White sugar
March white sugar prices declined 0.8%, closing at $503.70 per ton, as the market remained range-bound.
Market outlook
Cocoa: Index fund rebalancing could continue to exert short-term pressure, but supply concerns from Ivory Coast may provide medium-term support.
Coffee: Brazil’s weather challenges could underpin prices despite temporary selloffs from fund activity.
Sugar: Prices are likely to remain range-bound, with traders watching key support and resistance levels.
Conclusion
Soft commodities faced headwinds as index fund rebalancing led to widespread declines, with cocoa taking the hardest hit. Weather conditions, export dynamics, and supply data will play critical roles in shaping the trajectory of these markets in the coming weeks.