New York cocoa futures set a new 8-1/2 month high yesterday with a softer dollar giving added impetus to a run-up fuelled largely by a lower-than-expected crop in Ghana.
“It is currency-led today,” one London cocoa dealer said, adding an unexpected drop in production from number two grower Ghana remained the key bullish factor and currently appeared to be outweighing concerns about weak demand.
“It is a question of those two stories playing out. At the moment the specs don’t seem to care (about weak demand) given the situation in Ghana,” the dealer said.
Ghana has slashed its 2014/15 crop output target to 750,000 tonnes from an initial forecast of one million tonnes, blaming the drop on poor weather and disease outbreaks.
New York September cocoa was up $45 or 1.4 per cent at $3,267 a tonne at 11.36 GMT after peaking at $3,269, the highest level for the second month since late September 2014.
The dollar fell to a seven-month low against sterling yesterday, providing support for prices denominated in the U.S. currency but weighing on the London market.
September London cocoa rose a modest three pounds or 0.1 per cent to 2,134 pounds a tonne.