Asian Cocoa Prices Surge On Nyrally

Southeast Asian cocoa prices rose on Wednesday in tandem with the nine-year high in New York CSCE futures and concerns over the El Nino weather effect, local traders said. Supply of beans was stable but sellers were seeking the best premium they could to cash in on the rally, said the traders. "The minimum premium is 50 (ringgit) and could go up to 100," said a Malaysian trader, referring to the benchmark SMC Grade 1A cocoa.

On Wednesday, the Malaysian Cocoa Board quoted SMC 1A out of Tawau, the country's main growing area, at an average 4,000 ringgit a tonne. Grade 1B, also out of Tawau, was quoted at an average 3,950 ringgit.

 

Compared to Tuesday, both grades were up 82 ringgit. On Wednesday, traders quoted 1A at an average 4,050-4,100 and 1B at 3,980-4,000.

Traders said prices reflected strong international sentiment seen for cocoa due to fears that crops from Indonesia to West Africa could be hit by dry conditions stemming from an El Nino weather pattern. (Reuter)

On Tuesday, benchmark September on New York's CSCE closed $17 up at a nine-year high of $1,173.

But dealers there said they feared a massive correction if there was a turnround in the weather. "We just hope this rally is fundamentally-driven," said the senior official of a cocoa products company in Malaysia.

"For years, we've been waiting for the price to go to this level but we don't know how long it's going to last and whether it's just some manipulation by speculators," added the trader. Another Malaysian dealer said whether current prices were good was a relative question.

In Indonesia cocoa prices surged to a record high, buoyed by the sharp increase in New York as buyers scrambled for beans, traders said.

Faq beans were quoted at 3,550-3,600 rupiah/kg in Ujung Pandang, capital of the key growing region of South Sulawesi, compared with 3,300-3,400 last week. The price was unchanged at 3,450 rupiah in the North Sumatran capital of Medan.