Cocoa and Coffee Bounce Off Lows as Investors Seek Bargains

By Julie WernauFeaturesDow Jones Newswires

Cocoa and coffee prices bounced off lows Friday after buyers found bargains in the beaten-down contracts.

Cocoa for September rose 2.5% Friday on the ICE Futures U.S. exchange, on track for its first rise in seven sessions.

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Arabica coffee for September spiked 4.6% to $1.218 a pound, on track for its largest daily percentage gain in a year.

Coffee prices have been on a steady decline all year, reaching their high for the year in January, when prices reached $1.554 a pound.

On Thursday, they touched their lowest level since March 2016.

Commerzbank pointed to better growing conditions in Brazil, the world's largest growing region, which has also benefited recently from a depreciated currency against the dollar, making coffee sales more lucrative for producers repatriating dollar sales.

"The prospects of a record crop in Brazil, partly due to the latest depreciation of the Brazilian real, and the high global stocks could be cited as reasons for the [recent] price weakness," the firm noted.

However, Commerzbank said Friday that it thinks both cocoa and coffee prices would recover in the medium term as much of the price weakness is due to massive negative positioning from short-term oriented market participants. It called the recent lows "exaggerated."

Producers in Brazil "are not participating with the market falling off a cliff," trading house ED&F Man's Volcafe said, meaning that physical coffee sales are at a standstill as speculators aggressively sell and long-positioned traders have been liquidating.

In other markets, raw sugar for October was up 0.7% at 13.16 cents a pound, frozen concentrated orange juice for September rose 1.2% to $1.2945 a pound, December cotton was flat at 66.76 cents a pound.

Write to Julie Wernau at

(END) Dow Jones Newswires

June 23, 2017 11:41 ET (15:41 GMT)