Cocoa futures extended their recovery, settling at a four-month high, after data showed
European processing volumes at their strongest in six years, spurring hopes of
further upgrades to world demand estimates.
Cocoa futures for December closed up 2.5% at $2,097 a tonne, their highest close since June, and taking to 4.4% their recovery in two sessions.
Traders attributed the strength in part to technical
factors, after the contract in the last session closed back above its 200-day
moving average, and on Monday rebuffed an attempt to take prices back below the psychologically important $2,000-a-tonne mark.
"After yesterday's activity, momentum is still on the upside,"
Sucden Financial said.
However, gains were also attributed to data from the
European Cocoa Association showing that European cocoa processing volumes in
the July-to-September quarter hit 353,544 tonnes.
Besides representing a rise of 3.0% year on year, that
figure was a record high for the period, on data going back to 1999.
It was the highest for any quarter since the January-to-March
period of 2011.
The figure was also ahead of the 351,000-tonne outcome
suggested by a Bloomberg poll of analysts, although in line with the results of
a Reuters survey.
Commerzbank said that the data - coupled with a figure from Malaysia
overnight showing 4.7% growth in grinding volumes in the July-to-September
period – could prompt the International Cocoa Organization to downgrade further
its expectations for the world cocoa output surplus in 2016-17, which finished
"The current data could result in a renewed upward
adjustment of the demand estimate," the bank said.
However, it cautioned that estimates for the cocoa world supply
surplus at the close of last season looked likely to remain high, urging some
caution too over the prospect of North American processing data ahead.
"Grinding there has been on the decline of late, unlike in
Europe," the bank said.