London cocoa prices ended higher on Tuesday in a spread-driven market, hemmed in between speculative short covering and origin and trade selling, dealers said.
Prices opened modestly higher and gathered momentum in the afternoon, although resistance held.
"Spreads have been the main feature for the day," a trader said.
"There was some origin, trade hedging and some short covering from the specs, mainly in the States, which helped the market to move up.
"The arbitrage has been a little tighter, which has driven buying into London. But nothing was really ignited and resistance levels held. I think we are still range-bound."
Benchmark July ended eight pounds up at 813 per tonne, having moved 17,896 lots in a 819-802 range.
Second most active May closed one up at 787 on 16,031 lots out of a substantial turnover of 36,794.
The May/July spread widened to around a 28-pound discount from a 20-pound discount on Monday and accounted for most of the volume as the last trading day for the front month approached.
Dealers said Ivorian arrivals data released on Tuesday helped to support prices, mainly in nearby months.
"The market already knows about these arrivals, that the crop was a fair number. If anything, they might have an impact on the lack of demand," the trader added.
The Liffe market found support from a weak pound, which hit a five-month low against the dollar and a 1-1/2 month low against the euro on Tuesday.
A large fund short position estimated around 25,000 lots offered support and traders expected the market to experience a rally at some point on short covering. But recent lows around 787 could not be ruled out in the short term, dealers said.
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