Cocoa prices closed slightly higher following news that the world's largest cocoa grower is anticipating a slump in the upcoming cocoa crop.
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Cocoa for September rose 0.2%, to end at $1,821 a ton on the ICE Futures U.S. exchange, its first rise in six sessions.
The Ivorian Coffee and Cocoa Council said local flooding and bad weather persisting in Ivory Coast could create a 20% drop in cocoa output from October to December. But the reaction from markets was muted.
"One would think cocoa would pop up due to the news because any negative crop news would be positive for cocoa. But the traders and commercials believe that this news has been priced in and are not buying into the negative news literally," said Michael Kerensky, a trader at R. J. O'Brien & Associates.
Most analysts are still anticipating a surplus cocoa supply in the season that begins in October as the drop in output isn't expected to outstrip a slumping demand for cocoa.
The contract is entering a seasonal shift in which little reliable information about the coming cocoa crop creates low trade volumes and high volatility.
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The cocoa market is looking ahead to the next quarter of cocoa-processing data out of North America and Asia for indications of how recently low prices for beans have affected demand for the product.
In other markets, cotton prices ended lower after the U.S. Department of Agriculture did not lower production estimates as much as analysts had expected for the U.S. Cotton for December lost 0.6%, to end at 67.27 cents a pound.
Analysts surveyed by The Wall Street Journal expected the USDA to downgrade U.S. crop expectations due to hot and dry weather that is causing stress to some parts of Texas, the largest grower.
The USDA placed U.S. production at 19 million bales, versus the 18.92 expected by analysts and left ending stocks at 5.3 million bales versus 4.96 million estimated by analysts. Rabobank said the news means ending stocks would be 66% increase over last year.
Raw sugar for October was up 0.4%, at 13.41 cents a pound; arabica coffee for September rose 0.6%, to end at $1.276 a pound; frozen concentrated orange juice for September was down 0.9%, to close at $1.288 a pound; and December cotton lost 0.6%, to settle at 67.27 cents a pound.
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(END) Dow Jones Newswires
July 12, 2017 16:10 ET (20:10 GMT)