Cocoa prices at 24-year high as pound weakens

Cocoa prices in London surged above £2,000 a tonne Friday January 23, 2009 for the first time in almost 24 years. Liffe May cocoa futures, the market benchmark, jumped 2.9 per cent to £2,005 a tonne, the highest level since April 1985.

Cocoa gained more than 13.5 per cent on the week, helped by sterling’s weakness against the dollar and the euro, but also boosted by worries about low supplies from the Ivory Coast and Ghana, which together account for about 56 per cent of global cocoa production.

Elsewhere, aluminium tumbled to a seven and a half year low, as ballooning stockpiles in London Metal Exchange warehouses revealed a severe decline in demand for base metals.

Aluminium touched an intraday trough of $1,316.5 a tonne yesterday, its lowest level since October 2002.

It was down 8.2 per cent on the week after LME data showed inventories surged to a record high of almost 2.7m tonnes, breaking the previous record set in June 1994.

Eugen Weinberg, at Commerzbank, said: “While producers have responded with output cuts, these are evidently not yet sufficient to balance out the drop in demand, especially from the car industry.”

The grim outlook for metals worsened after China, the world’s driver of commodities demand, reported its slowest economic growth in seven years.

Gold continued to benefit from the worsening economic climate, soaring 14.1 per cent on the week to an all-time high in sterling terms, at £651.07 a troy ounce, as the haven attraction of the metal coincided with investors taking refuge from the weakness of the pound. In dollars, gold leapt 4.2 per cent to $893.2 an ounce, its highest point in more than three months, up 6.2 per cent on the week.

Oil rose on the week, propped up by Opec’s stern stance on supply cuts, which offset a worse than expected surge in weekly stocks of crude oil. ICE March Brent rose $1.85 to $47.24, up 1.7 per cent on the week. The less representative Nymex March West Texas Intermediate rose 7.1 per cent on the week to $45.68.

Source: FT