By Debarati Roy - Feb 21, 2011 Hedge funds are the most bullish on cocoa futures in almost seven months as political turmoil threatens supplies from Ivory Coast, the world’s biggest producer, and prices jumped to the highest since 1979.
In the week ended Feb. 15, hedge funds and money managers increased their net-long positions, or bets on rising prices, by 11 percent to 20,936 futures and options contracts, the highest since July, U.S. Commodity Futures Trading Commission data show. The holdings have more than doubled in the past month.
Alassane Ouattara, the internationally recognized winner of Ivory Coast’s Nov. 28 elections, told exporters to halt cocoa shipments until Feb. 23 in a bid to cut off funds to his rival. Prices surged to a 32-year high last week. The political stalemate entered its third month as Laurent Gbagbo, the incumbent president who has ruled for a decade, refused to cede power.
“The supply situation because of Ivory Coast problems is worrisome,” said Luis Rangel, a vice president at ICAP Futures LLC in Jersey City, New Jersey. “Speculators are very active in this counter.”
Cocoa futures for May delivery jumped $61, or 1.8 percent, to settle at $3,499 a metric ton on Feb. 18 on ICE Futures U.S. in New York, after touching $3,511, the highest since February 1979.
The export ban may send prices as high as $3,720, according to a Bloomberg survey of six analysts on Jan. 25. That would be the highest since January 1979.
Managed-money positions include hedge funds, commodity pools and commodity-trading advisers. Analysts and investors follow changes in speculator positions because such transactions may reflect an expectation of a change in prices.
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