By Marcelo Teixeira and Nigel Hunt
NEW YORK (Reuters) - Prices for cocoa, the main ingredient used to make chocolate, rose to the highest ever on Tuesday as demand for the beans appears to be holding well despite the constant increase in costs, experts said.
Financial investors were said to be the main driver of prices on the Intercontinental Exchange in London, where the March cocoa contract hit a peak of 3,155 pounds per metric ton, the highest price since cocoa futures started trading there in 1920. The March contract last traded 1% up at 3,140 pounds/ton.
"Grind numbers have been better than expected so far, so there is no indication yet that high prices are leading to demand destruction," said Steve Wateridge, global head of research at Tropical Research Services (TRS).
The analyst was referring to the European third-quarter cocoa processing data issued last week. The amount processed fell less than expected at 0.9% from a year earlier.
Cocoa brokers said other positive fundamentals are the slow arrival of cocoa at ports in West Africa and the fact that the global supply balance is heading for a third consecutive deficit.
They said that the market supply tightness is attracting buying from speculators.
"It is a good combination of both fundamental and technical buying with both the funds and commercials buying the two markets (London and New York), I would say more so speculative buyers today though," said a U.S.-based broker.
December New York cocoa settled up $44, or 1.2%, at $3,635 a ton.
In other soft commodities, March raw sugar rose 0.44 cent, or 1.6%, to 27.49 cents per lb, just shy of a 12-year high hit last month as the sweetener continues to be underpinned by drier-than-normal weather in Asia, while refined sugar (December contract) rose $13.90, or 1.9%, to $738.90 a ton.
January robusta coffee settled up $24, or 1%, at $2,320 a ton. Dealers noted rains had caused some delays to the harvest in top robusta producer Vietnam, although activity should pick up in the next couple of weeks.
December arabica coffee rose 2.9 cents, or 1.9%, to $1.5705 per lb.