Coffee and cocoa futures both rose on Thursday, as traders saw inventories shrinking over the summer. On the IntercontinentalExchange in New York, cocoa futures for December delivery rose .12 percent to $3,143 per metric ton after earlier reaching as high as $3,180 per ton.
“Fundamentals for cocoa remain bullish,” Kona Haque, an analyst at Macquarie Group in London, told Bloomberg News. “There’s not a lot of good-quality cocoa available at warehouse.”
The ICE reported that cocoa inventories have decreased 20 percent in the past three months, hitting their lowest level since February.
In the long term, many traders are eyeing China, where consumption of chocolate has been surging in recent years. Chinese people consume an average of just 100 grams of chocolate per year, about 1 percent of the amount consumed by Europeans, according to the Economist.
That leaves a huge amount of potential for growth in the Asian chocolate market.
Coffee “C” futures for December delivery gained .264 percent to trade at $1.713 per pound. Earlier in the day, the price went as high as $1.736 per pound. On the Liffe, the September cocoa contract carries a premium of over 5 percent over the December delivery month, which indicates a shortage of readily available supplies.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
