Cocoa speculators are bracing for what many investors fear be the worst set of processing data since the world financial crisis to see if their brighter call on the bean is justified.

Speculators have covered a mass of short positions in cocoa futures and options, turning net long last week in New York-traded contracts, to their highest level since September, regulatory data this week showed.

In London, speculators' net short position - meaning short bets, which benefit when prices fall, exceed long holdings which profit when values rise – fell below 7,000 lots to its lowest in a year.

The moves - which have helped cocoa futures stabilise in New York and maintain a slow recovery in London from a December low, helped also by a weaker pound – have been encouraged by growing concerns for West African crops.

'Fears of fungal diseases'

"High humidity levels in key growing areas are fuelling fears of fungal diseases," Commerzbank said, noting fears that Nigerian yields could fall 30%.

In Ivory Coast, the top producing country "although the pollination phase has been satisfactory, more sunshine is now needed to ensure that the beans ripen without being attacked by fungus and to produce a good main harvest from October", the bank said.

Macquarie said: "There seem to be diverging views on the crop-setting for the 2012-13 main crops in Ghana and Ivory Coast, with consensus edging on the side of caution for next season."

And this following weakness the Ivory Coast mid-crop, which has left deliveries of beans to ports running some 3% lower in 2011-12 than last season.

"Ivorian cash farmgate prices have risen due to the late start to the mid-crop, poor quality of cocoa beans emerging so far, and on early indicates that the mid-crop may already be tailing off," Macquarie said.

'Slow demand'

However, the production concerns - also being stoked by the prospect of an El Nino, which tends to bring drier weather to West Africa, and lower yields - are being balanced by fears over the dent to consumption from weak economic growth.

"Despite low certified stocks and London [futures exchange] warehouses, European second-quarter cocoa grindings are expected to fall 5% year on year," Macquarie said.

A decline of that magnitude has not been seen since the October-to-December quarter in 2009.

Commerzbank analysts said: "It is expected that the crises in leading consumer countries will leave their mark and slow demand."

The European Cocoa Association will publish second-quarter data for Europe on Thursday, with its North American peer to publish data for Canada, Mexico and the US next week.