London cocoa prices have constantly to climb

London cocoa prices have constantly to climb. Near 2.725 pounds per tonne for the end of July on the Liffe market, they have constantly revise upward their peak since September 1977. On 14 July, in New York, the course of the delivery September soared unbeatable for seven months, propelled by excellent figures of European demand for beans.

According to statistics published by the European Cocoa Association (AEC), the organization that represents the main buyers of the old Continent, in the second quarter, they have used 328.704 tons of this tropical product, an increase of 13 over the same period of 2009. This quarterly increase is the largest found since the third quarter of 2000. Operators fear that the offer is insufficient in the short term. Consider reinforced by the fact that harvesting of Côte d'Ivoire, the first producer countries with about 40 of the overall throughput is disappointing.

The international organization of cocoa (OIC) noted its estimate of the deficit of the offer for this year to 69,000 tonnes. However, as noted by the experts at Commerzbank, this fundamental yet gives no e not enough to explain the long upward March of London prices. As much more the gap of appreciation with the New York contract of equivalent September is still significant despite Wednesday's soaring ( 3.5, compared with 1.6 revel). This gap now exceeds 560 dollars per tonne for the benefit of the London version.

The interveners questioned including quantity abnormally high positions open for a few days of the expiration, reached yesterday, the end of July. Normally, upon arrival at the end of a contract, by simultaneous mechanical effect of the bearing of the open positions and liquidations, the course with the deadline following closely. However, due to the extreme "backwardation" (close expiry price exceeds that of those more remote) market of cocoa, the gap between July and September deliveries continued instead to widen after mid-June until the expiry of the July contract yesterday. The significant reduction of the positions open in the last days of this contract resulting in massive physical deliveries rating has changed nothing. Anticipates to 200,000 tonnes, against 50,000 tonnes a year earlier, is about four fifths of underlying volumes stored in the warehouses of the Liffe. It is therefore likely that short sellers have capitulated taking relay buyers, now convinced that the price increases will continue.

Manipulation of the courts

Many professionals also evoke the hypothesis of a manipulation of the courts of the part of large houses some hedge funds and trading very active on this market. The signatures of these stakeholders do not appear on the back of the letter recently to the Liffe by 16 large groups consumers of the bean with the powerful German Association of cocoa complaining of the risk of speculative distortion trade courses, says MF Global. Relayed by several NGOs advocating fair trade, their protest was heard by the Liffe. Well concrete risk is that interest be moved on the New York contract, deemed more transparent. The London market company, which opened a discussion on transparency, prepares to publish detailed reports on the positions open on the model of its competitor transatlantic.