Cocoa hovers near two-year lows as surplus worries weigh

LONDON, Feb 2 (Reuters): Cocoa futures on the ICE exchange hovered near two-year lows on Monday, with dealers remaining concerned over the size of surplus stocks in West Africa because of reduced global demand.

London cocoa dropped 1.1% to 2,880 pounds a ton by 1359 GMT, not far from Friday's more than two-year low of 2,728 pounds.

Ivory Coast cocoa processors are refusing to buy beans produced during the coming mid-crop, saying the cost is too high and demanding tax relief, three government sources told Reuters.

Dealers noted that discussion is ongoing about how much the country has to sell for the current season, especially with global demand remaining weak.

Ivory Coast said last week that it would officially purchase 100,000 tons of surplus cocoa because exporters were refusing to pay the government-mandated farmer price.

New York cocoa lost 1.2% to $4,116 a metric ton, close to Friday's more than two-year low of $3,931.

Coffee

Arabica coffee rose 0.6% to $3.3450 per lb after matching Friday's 5-1/2 month low of $3.3100.

A larger arabica crop is expected in top grower Brazil this year, with good rain volumes in the later part of January improving conditions ahead of the harvest.

Robusta coffee lost 1.2% to $4,064 a ton.

Indonesia's December exports of Sumatra robusta coffee beans increased 52% year on year, data showed. Indonesia is the world's third-largest robusta coffee grower.