Cocoa Rises, Topping Commodities, Amid Global Supply Shortage

[Joanne98]

By Shruti Date Singh

Dec. 31 (Bloomberg) -- Cocoa futures in New York rose, becoming the top-performing commodity this year, as global demand is expected to exceed supply for a third straight year.

Cocoa rose 31 percent in 2008, the largest gain among 19 raw materials in the Reuters/Jefferies CRB Index. Global demand will exceed supply by 45,000 metric tons in the year ending Sept. 30, Fortis Bank and VM Group said in a report Dec. 22. Stockpiles will drop 3.1 percent to 1.43 million tons this marketing year, according to the report.

“Cocoa has the best fundamentals of any commodity except maybe tin,” Lars H. Steffensen, a managing partner at Ebullio Capital Management LLP in Southend-on-Sea, U.K., said in an e- mail today. “They share a low-inventory story, straight deficits and limited ability for production increases, along with supply pipe problems.”

Cocoa futures for March delivery rose $136, or 5.4 percent, to $2,665 a metric ton on ICE Futures U.S. in New York. The most-active contract gained for the third straight year amid the supply deficit and a reduced crop in Ivory Coast, the biggest grower of the beans used to make chocolate.

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[anigbrowl]

1. chocolate is a favorite legal drug

But also, it goes up near the end of the year because of the holiday gift-giving and Valentine's day 6 weeks into the new year. I'm also thinking that a box of chocolates is a cheap but respectable alternative present compared to consumer durables. (almost) everybody likes chocolate.