* Delivery represents almost all exchange stocks
* September premium to December widens
* ICCO urges more transparency on Liffe exchange
(Adds ICCO head's comments)
By Sarah McFarlane and Nigel Hunt
LONDON, July 16 Nearly all the physical stocks
of cocoa that back futures trading of the commodity in London
were snapped up on Friday after the July contract expired,
fuelling fears of a September supply crunch.
The delivery of 240,100 tonnes of cocoa was the largest in
nearly 14 years and represented almost all the physical stocks
registered with the Liffe exchange that stood at 246,810 tonnes
as of Monday July 12.
It follows weeks when the open interest for the July
contract -- the outstanding positions -- was very high,
prompting some market participants to complain to the Liffe
exchange about the extent of speculation in the market and the
lack of transparency on who was doing what.
There had been talk that one player may take delivery of
most of the cocoa from July's expiry, potentially limiting the
amount available to tender against the September contract and
helping to push prices past 32-year highs set this week.
"September is going to be a bit nervous going forward,
looking at this delivery size," said a London-based trader.
"There's not a great quantity (left) for September."
The Liffe delivery data released on Friday does not show
details on the final buyer of the cocoa, just the names of
brokers taking delivery on behalf of their clients.
NYSE Liffe NYX.N declined to comment on Friday on the
delivery from the contract expiry.
The exchange said this week it was in constant dialogue with
its clients. On its website it says that as a regulated market,
NYSE Liffe Euronext operates a fair and orderly market.
The International Cocoa Organisation (ICCO) urged for more
transparency on the Liffe market following the large delivery.
"The problem is that in particular there is not enough
information on the transactions in the market," Jan Vingerhoets,
head of the ICCO told a news conference in Abidjan on Friday.
"We hope very much that the situation today, the day July
contract expires will be an incentive for London to finally
improve the transparency,"he added. [ID:nLDE66F1RT]
Futures business normally involves chiefly the buying and
selling of promises to deliver a commodity and it is rare for
market participants to take such a large physical delivery.
BNP Paribas Commodity Futures Ltd took delivery of 102,450
tonnes of cocoa, Newedge Group SA 77,650 tonnes and ABN AMRO
Clearing NV 60,000 tonnes. Brokers do not disclose on whose
behalf they are acting.
The September futures premium widened over December as the
delivery was announced, almost reaching 200 pounds a tonne. This
pattern of prices, known as a backwardation, implies
expectations of supply tightness and reflected market jitters
about the high delivery.
"September/December continues to be very strong. September
is going to be a concern for players," a trader said.
Ten brokers delivered cocoa against July, the largest of
which were Newedge Group SA (188,020 tonnes) and ABN AMRO
Clearing NV (22,890 tonnes).
For a graphic on past deliveries:
Take a look: [ID:nLDE66B1VS]
(Additional reporting by Michael Hogan in Hamburg; Tim Cocks in
Abidjan; editing by Anthony Barker, Veronica Brown and Sue