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Cocoa futures fall as dollar gains vs. euro, but prices expected to rebound on strong demand

Cocoa futures fall as dollar gains vs. euro, but prices expected to rebound on strong demand

Cocoa futures fell Tuesday as a stronger dollar encouraged investors to sell commodities, but analysts said prices were expected to rebound amid strong global demand for chocolate.
The dollar muscled higher against the euro on supportive comments from President Bush and other U.S. officials that have increased speculation that the Federal Reserve will raise interest rates later this year in a bid to curb inflation. A stronger dollar often leads investors to sell commodities, which are viewed as inflation hedges.
Cocoa futures for September delivery fell $10 to settle at $2,878 per metric ton in volatile trading on the Intercontinental Exchange. Prices earlier rose as high as $2,921.
"The strengthening dollar is pressuring cocoa prices some, but there's still a lot of support for prices so I don't see them coming down substantially," said Rohit Savant, analyst with CPM Group in New York.
He said strong demand for chocolate in China and Eastern Europe coupled with a possible cocoa shortfall in No. 1 producer Ivory Coast would likely push prices higher in the near term.
"You have pretty strong demand around the world for chocolate but supply is erratic," said Savant.
Cocoa prices have surged 33 percent in the last year. In a report last week, investment bank Fortis said it expects a global cocoa shortfall for the third straight year, mainly due to unfavorable weather and rising demand.


Updated : 2021-05-19 05:59 GMT+08:00