Softs - Cocoa prices lower on improving supply outlook from Ivory Coast

Cocoa prices could continue sliding this week after losing 4 pct last week, as investors book profits after the bean's recent strong run, fearing supplies from West Africa could be better than first thought.
Two weeks ago, prices had risen to two-month highs on concerns over tight supplies from leading producer the Ivory Coast.

However, with deliveries from the number one West African producer now arriving into port at a faster-than-expected rate, prices have retreated as market players try to gauge the strength of the overall crop.

One cocoa analyst said the higher-than-expected levels of supply had undermined the bull's case for the moment and they expected to see some more profit-taking while speculative players stuck to the sidelines until the size of the Ivory Coast crop could be better assessed.

However, they also cautioned that black pod disease still proved a significant threat to supply from the Ivory Coast, so a reversal in cocoa prices could certainly not be discounted.

At 4.54 pm, cocoa for December delivery on the Euronext Liffe in London was down at 932 stg against 949 stg at the close Friday.

In other softs traded, wheat prices are retreating further from their recent record highs, with some players fearing the recent rally has been overdone. News of a good crop from Argentina is also weighing on prices, analysts said.

Milling wheat for November delivery was down almost 7 pct at 235.50 eur per tonne against 253.25 eur on Euronext Liffe in Paris, while feed wheat for November delivery was down over 11 pct at 150 stg against 169 stg on the Euronext Liffe in London.

Elsewhere, Robusta coffee for November delivery was up to 1,950 usd against 1,915 usd at the close on Friday. Fears of more dry weather conditions in key producer Brazil continue to support the market.

Fund money has also flowed into coffee, pushing up prices, with the latest Commitments of Traders report showing speculative net long positions - or bets on price rises - are up by almost 6,000 to 47,715 in the last week.

Finally, No 5 white sugar for December delivery was down at 273 usd a tonne on the Euronext Liffe against 275 usd at the close Friday, with the outlook for prices still muted on account of the global oversupply.

d.sheppard@thomson.com ds1/cm2 COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved.

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