Cocoa futures fell Monday after hitting six-month highs last week as more sunshine is expected for the world's largest cocoa grower, adding to concerns about a global surplus.
Cocoa for December delivery was down 2.1% to settle at $2,044 a ton on the ICE Futures U.S. exchange. The contract closed at $2,097 a ton early last week, the highest settlement since April.
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Wire services in Ivory Coast were reporting that increased sunshine was expected to boost the nascent main crop despite heavy rains that continued last week in most of the cocoa-growing regions in the country.
Prices of cocoa have been moving in a narrow 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, said Peter Mooses, senior market strategist at RJO Futures.
Cocoa traders are awaiting the release of the third quarter North American cocoa grindings, which is expected to be out on Thursday. This will be the latest sign of how global demand has responded to the lower prices of cocoa, traders said.
Ivory Coast officially kicked off the 2017-2018 season on Oct. 1, with a government guaranteed price for farmers of 700 CFA francs ($1.26) per kilogram, well below growers' expectations.
In Ghana, the government decided to keep the price it pays cocoa farmers unchanged at 7,600 cedis ($1,735) per metric ton for the 2017-18 season, according to Reuters. Analysts say the price gap between the two countries will fuel illicit bean trafficking.
Traders were looking ahead to the 2018 season, expecting a drop in production after weak earnings this year constrained the income farmers will have to invest in next year's cocoa crops.
Raw sugar for March was off 1.6% to close at 14.18 cents a pound, arabica coffee was down 2.1% to $1.2375 a pound, frozen concentrated orange juice for November rose 0.5% to end at $1.5235 a pound, and December cotton lost 1.6% to 67.53 cents a pound.
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(END) Dow Jones Newswires
October 16, 2017 15:18 ET (19:18 GMT)