Cocoa Prices Up

Intercontinental Exchange (ICE) cocoa futures recovered slightly on Tuesday from the previous session's losses on the back of a weaker dollar and a stronger price for oil.

The dollar fell across the board on Tuesday, pressured by comments from Russia suggesting a need for a global reserve currency other than the greenback, which also caused oil to rise above $72 a barrel.

“We had a pretty good speculative wash-out yesterday in both coffee and cocoa,” said Rabobank trader Nick Hungate.

New York's September cocoa contract finished $11 higher at $2,656 per tonne, after falling 5.5 per cent on Monday.

London's September cocoa contract finished down 12 pounds at 1,683 pounds per tonne, having sunk 65 pounds on Monday to settle at 1,695 pounds per tonne.

Hungate said sterling's strength was keeping London low.

A strong pound makes sterling denominated futures more expensive in terms of other currencies.

“If it's going to recover it will take quite a few sessions,” a cocoa trader said.

“They've obviously decided they kind of jumped on the commodity recovery a little too early. Maybe it's been taken back to a little bit more sustainable positions.”

“I think the ICE contract will come back faster because of the stronger pound compared to the dollar,” another cocoa trader said.

“Nobody is really counting, in the short term, on dollar strength so if you're going to go long on cocoa you're better off playing the ICE market than the LIFFE market.”