June 04, 2007	Monday	Jamadi-ul-Awwal 18, 1428

Cocoa

The International Cocoa Organization (ICO) forecasts a 2006-07 world cocoa crop of 3.44 million tones, which is down 7.4 per cent on the year. It forecasts grindings at 3.55 million tones, which is up 1.8 per cent on the year. Ivory Coast, the largest cocoa producer, is estimated to produce around 300,000 tons at 2006-07 mid-crop, which is down from the 440,000 tons produced at last year’s mid-crop.

There will be a cocoa surplus of 19,000 metric tons in 2007-08, says Fortis Bank says. It previously forecast a surplus of 28,000 tons, It maintains that there will be a 215,000 ton cocoa deficit in 2006-07. Top cocoa grower Ivory Coast is experiencing a drought that farmers have described as the worst in living memory and a sharp drop is expected in the April-September mid crop, which is the smaller of two six-month growing cycles.

The ICO also sees tight West African mid crop supplies in 2006-07, but it expects that prices will not rise much higher in coming months based on supply demand outlook. On May 31, 2007, the ICO predicted that the 2006-07 world cocoa crop will have a production deficit of 145,000 tons, helped by a seven per cent drop in the size of the cocoa crop.

Earlier this month the Fortis Bnk had predicted that 2007-08 would see a 64,000 ton world production surplus. The US cocoa grind totaled 97,584 tons in the first quarter of 2007, down seven per cent from a year ago. Independent analyst Hans Kilian has forecast global cocoa supply deficit for 2006-07 at 250,000 tonnes. The ICO has rounded up a more conservative estimate of 103,000 tonnes.

Cocoa prices had a strong run higher recently, amid uncertainty over West African crops, following severely dry weather conditions there. London cocoa futures were lower “falling under pressure from speculative profit-taking, after prices reached four-year highs”.

On the LIFFE, the price of cocoa for July delivery slipped to £1,057 a tonne, from £1,090 a week earlier. On the New York Board of Trade (Nybot), the July contract decreased to $1,918 a tonne, from $1,947.

US cocoa futures closed quietly higher following firm straight sessions of slippage, on two sided technical trade amid a lack of new fundamentals.

Soyabean

Global production of major oilseed is projected at 399 million tones, (mt) for 2007-08, down 3.8 mt from 2006-07. It realised, it will be the first year-to-year decline in global major oilseed production since 1995-96, US Department of Agriculture (USDA) said in its latest world agricultural supply and demand estimate for next season.

The US oilseed production next year is projected at 84.1 mt, down 13 per cent from the previous year. Soyabean output in the US, world’s largest producer, will down sharply due to smaller planted area (shifted to corn).

Rapidly expanding production of bio-diesel from saoyabean oil is contributing to a projected six per cent increase in domestic soya oil disappearance.

Bio-diesel production is projected to use 19 per cent of total soya oil production for 2007-08 as compared with 13 per cent in 2006-07, USDA said.

The US season-average soyabean price for 2007-08 is projected at $6.50 to $7.50 per bushel, compared withy $6.30 per bushel in 2006-07. US prices are expected to remain firm due to relatively strong corn and soyabean oil prices.

Soyabean meal prices are forecast at $185 to $215 per short tonne, compared with $195 per tonne for 2006-07. Soyabean oil prices are projected at 29.5 to 33.5 cents per pound compared with 29.5 cents per pound for 2006-07. Meanwhile, in Chicago, July soyabeans fell 11½ cents to $8.01 a bushel while July corn retreated 11 cents to $3.65 a bushel. US soyoil prices soared to near 23-year highs as oilseed prices gained on the increased demand for making bio-diesel. The CBOT soyoil futures hit an intraday high of 35.70 cents a pound, before easing to 35.71, up 0.13 cents on the day. The rise was fuelled by palm oil futures in Malaysia rising to a nine-year high.

Oil

Oil slipped below $68 the fourth straight day of losses, reflecting increased gasoline output in top consumer the United States. A fresh attack on a Nigerian pipeline provided some support and illustrated the uphill task the new president faces to restore lost output in the world’s eight biggest oil exporter. Analysts played down the impact of a 6.5 per cent drop in Chinese stocks that sent ripples through other Asian and European markets.

London Brent crude LCOcl, currently a better indicator of the global market than US oil, was down 28 cents at $67.85 a barrel after tumbling $1.58 on May 29 as more US refineries returned to full operation after technical problems. US crude was up 40 cents at $63.55.

Relatively low gasoline stocks in top consumer the United States at the start of peak summer demand helped drive Brent crude oil to a nine-month high above $71 last week. Analysts forecast gasoline supplies rose last week by 1.2 million barrels after refineries boosted production at the start of the summer driving season.

The organization of the petroleum exporting countries (Opec), source of more than a third of the world’s oil, agreed last year to curb output by 1.7 million barrel per day, roughly six per cent. The International energy Agency (IEA) has called for three consecutive months for Opec to reverse some of those cuts to refill stocks and lower prices. Inventories in industrialised nations were falling at an unusually fast rate for the time of year, the adviser to 26 industrialized nations said in its May Oil Market Report.

Opec sees no reason to change crude output as the nine-month high in oil prices last week was due to US gasoline supply concerns and international political tension, a senior Opec delegate said. There is no reason for now to change. On the crude side, the market is well balanced.

The world oil markets are well supplied and price volatility is the result of a lack of refining capacity in the United States, not a shortage of crude. Oil has risen from below $50 in January due to lower supplies from Opec violence in Nigeria that has cut output there and a drop in inventories of gasoline in the United States. Various refinery problems in the United States have curbed motor fuel output.