New York cocoa down a notch on speculative selling

US cocoa futures prices ended lower on Wednesday, with speculative sellers reversing buying spree as the dollar strengthened, traders said. The benchmark July cocoa contract dipped $6, or 0.4 percent, to settle at $1,491 a tonne on the New York Board of Trade (NYBOT). It traded from $1,490 to $1,509. September likewise declined $6 to end at $1,513 a tonne, while deferred deliveries eased $5 to $6. "It was mainly all speculative activity out here.
The funds were a little surprising today, because they actually bought cocoa when the dollar strengthened," said one floor trader. Generally, a strong US currency makes dollar-denominated cocoa futures more expensive for holders of other currencies.
The dollar firmed against most currencies on Wednesday after a narrowing of the US trade deficit eased market concerns about the country's external financing problems. In London, cocoa futures closed a whisker lower after dealers there engaged in spread trading. The Life's bellwether July contract finished at 828 pounds a tonne, down 1 pound.
Cocoa prices in London, lingering near a nine-month low, are unlikely to move higher until at least September when the outlook for the next West African crop can be assessed, said Jan Vingerhoets, acting executive director of the International Cocoa Organisation.
"There is no reason for prices to go up. There are plenty of stocks and people are more confident that if prices go up a little there is immediately more production," he said.
In New York, cocoa futures prices have been drifting in a narrow trading range and thinly traded volumes after the benchmark July contract touched a seven-month low at $1,455 on May 6.
NYBOT estimated trading volume of cocoa futures climbed to 4,412 lots from the official 3,425 lots the previous session. Traders said producers and industry appear to be sitting on the sidelines, awaiting more input about mid-crop harvests and the development of future crops in cocoa-rich West Africa.
Rains were mainly above average in growing regions of No 1 cocoa producer Ivory Coast during the first 10 days of May, weather data showed on Wednesday.
This kept farmers optimistic about the April-September mid crop. Technically, traders see strong support in the NYBOT July contract at $1,475 and then at $1,450, with resistance at $1,525 and then $1,600.