Cocoa Falls in Rangebound Trading
Cocoa prices fell Tuesday, extending its losing streak into a fourth session, as the market continued to swing in a range in the absence of fresh news.
Cocoa for December delivery was down 0.7% to $2,070 a ton on the ICE Futures U.S. exchange. The contract has declined 3.3% over the past four trading sessions.
Prices of cocoa have been moving in a range for the past few months. While signs of improving demand had nudged up prices from time to time, many money managers were betting on a record output and looking to short the market whenever prices hit $2,100 a ton, analysts said.
"It's a purely technical trade now," said Frank Cholly, senior market strategist at RJO Futures.
"There's not enough bullish news to (support cocoa) continue to move higher. We will remain bearish until we see demand outstrip supply," he added.
However, some market analysts saw the risk for prices to break out upward.
BMI Research, a Fitch Group company, noted that speculative positioning - measured as a ratio of long to short non-commercial positions - is at multi-year lows, "suggesting that the market is at a bearish extreme and has significant room to rebound."
BMI expected market conditions to tighten over the coming months as output levels fall in the major West African producing countries and overhang from this year's bumper surplus begins to fade, which will stimulate a bout of short-covering and bring up the prices.
Raw sugar for March was off 0.1% to 14.27 cents a pound, arabica coffee was up 0.8% to $1.2420 a pound, frozen concentrated orange juice for January rose 1.5% to $1.5345 a pound, and December cotton added 0.3% to 69.75 cents a pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
Cocoa prices fell Tuesday, extending its losing streak into a fourth session, as the market continued to swing in a range in the absence of fresh news.
Cocoa for December delivery was down 0.2% to settle at $2,079 a ton on the ICE Futures U.S. exchange. The contract has declined 3% over the past four trading sessions.
Prices of cocoa have been moving in a range for the past few months. While signs of improving demand had nudged up prices from time to time, many money managers were betting on a record output and looking to short the market whenever prices hit $2,100 a ton, analysts said.
"It's a purely technical trade now," said Frank Cholly, senior market strategist at RJO Futures.
"There's not enough bullish news to (support cocoa) continue to move higher. We will remain bearish until we see demand outstrip supply," he added.
However, some market analysts saw the risk for prices to break out upward.
BMI Research, a Fitch Group company, noted that speculative positioning - measured as a ratio of long to short non-commercial positions - is at multi-year lows, "suggesting that the market is at a bearish extreme and has significant room to rebound."
BMI expected market conditions to tighten over the coming months as output levels fall in the major West African producing countries and overhang from this year's bumper surplus begins to fade, which will stimulate a bout of short-covering and bring up the prices.
Raw sugar for March was off 0.7% to close at 14.18 cents a pound, arabica coffee was up 0.7% to end at $1.2410 a pound, frozen concentrated orange juice for January rose 1% to close at $1.5270 a pound, and December cotton skidded 0.3% to 69.31 cents a pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
October 25, 2017 17:19 ET (21:19 GMT)