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Evening markets: traders go cold on cocoa

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Cocoa managed to make itself heard, despite the racket surrounding grains, by falling with a near-4% thud.

The main farm commodities garnered must attention thanks to the US Department of Agriculture's latest report on global supply and demand, a highlight of the trading month.

The report helped corn prices but depressed wheat and soybeans, as reported elsewhere on Agrimoney.com.

But Tuesday will also go down as bluesday for cocoa, which finally succumbed to fundamentals of lower demand and robust supply, with a little help from technical factors to complete the bearish picture.

New York cocoa for July slid $85, or 3.4%, to $2,385 a tonne. Its London counterpart did even worse, slipping �79, or 4.6%, to �1,640 a tonne.

'Big move in fundamentals'

Traders blamed the fall mainly on a slowburn reaction to Monday's comments from the International Cocoa Organisation (ICCO) that cocoa grinding would fall 6% in the year to September, their biggest fall in half a century.

Meanwhile, reports on most crops appear positive, with the exception of Indonesia, which the ICCO would now produce "well below" 500,000 tonnes because of poor crop husbandry.

"There has been a big move in fundamentals and that has caused fund liquidation," a cocoa trader told Reuters, the news agency.

Cocoa's failure to break back above its 40-day average of $2,496 unnerved chartists, whose concerns added to cocoa's fall.

Sugar also gave back gains, as traders worried whether the recent rise in prices to near-three year highs had persuaded buyers in India, which is suffering a shortage, to sit on the sidelines.

London white sugar for August ended down $4.70 at $439.70 a tonne.

Tree wilt

Orange juice was an altogether more refreshing alternative, up 1.3 cents to 93.6 cents a pound, within a short hop of a fresh seven-month high, after a separate USDA report maintained forecasts of a 16% cut in Florida's output of Valencia oranges.

Florida's groves have struggled against hot and dry weather, with the USDA commenting on "low surface soil moisture and tree wilt".

Pigs were also on the rise on hopes that pork export bans imposed after swine flu would soon be lifted.

Chicago's June hogs added 1.6% to 68.85 cents a pound, with their July comrades adding 0.8% to 70.30 cents a pound.

By Agrimoney.com

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