Weak cocoa futures down to manufacturers buying policies

03 December 1998

Weak cocoa futures down to manufacturers’ buying policies

LEADING commodities broker GNI says a change in manufacturers buying policies accounts for weak cocoa futures prices.

The broker says in a report it is not confident about the outlook for cocoa.

GNI observes that chocolate makers are starting to move towards “just-in-time” stock control policies meaning they are buying almost at the point of manufacture rather than holding stock in reserve.

The US Department of Agriculture puts global coffee production at 2.69 million tonnes for the 1998-99 season, but forecasts total grindings at 2.9m tonnes, which would mean a supply shortage.

Prices have been weak in recent months on the London International Financial Futures and Options Exchange trading at below £1000 a tonne.

• Financial Times 03/12/98 page 40