International Herald Tribune – Cocoa prices fell on Tuesday, recording their biggest two-day loss since 1989, on concern that the recent rally was overblown.
Hedge fund managers and other large speculators have increased their net-long positions in New York cocoa futures, a government report showed. The net-long position was the biggest ever, asignal to some investors to sell because prices had jumped as much as 21 percent since May.
“It’s completely crashed,” said Jonathan Bristow at the commodity brokerage firm Bache Financial. “Cocoa’s been about £150 overvalued. Some funds are selling because they’ve had their moneytied up in cocoa and can make more investing elsewhere, such as in the gold market.”
Cocoa fell £37, or 4.2 percent, to £868 a ton on the Liffe exchange in London, after trading as low as £862. Prices have plummeted 20 percent in the past two days, their biggest two-day losssince at least 1989, Bloomberg data show. Cocoa rose to £1,102 on July 13, its highest level since September 2003.
On the New York Board of Trade, cocoa dropped $61 to $1,497 a ton. Prices, which reached a 15-month high of $1,738 last Tuesday, fell 9.3 percent on Monday.
Before last week, cocoa prices had fallied 14 percent this year, partly because funds were betting that violence in the Ivory Coast, the world’s biggest grower, would lead to a drop inexports.
