The benchmark cocoa futures price on the New York Board of Trade rose 1.5 percent on Wednesday to its highest in a month, with fund buying and positive technical signals keeping the market aloft for the third straight day, traders said.
Market players have been slowly moving back into cocoa futures over the past week amid prospects of easing supply in the 2004/05 season, coupled with limited producer hedging and renewed violence in top producer Ivory Coast.
NYBOT's front-month September contract rose $21 to settle at $1,458 a tonne, the highest price since June 29. The contract triggered stop-loss buying after it broke above technical resistance at $1,444, which was last week's highest trade, before topping at $1,463.
The market has been recovering from hitting a one-year low on July 8.
"There was quite a bit of fund buying in the market today. It looks like they bought close to 2,000 lots," one trader said.
He said cocoa futures trading volume reached an estimated 12,222 contracts, nearly tripling the previous session's turnover. "I think it's more technical stuff than fundamental which really moved this market," the trader added.
Among other cocoa contracts, December concluded $21 higher at $1,488 a tonne, and deferred deliveries advanced $19 to $20. "The market has reached a stalemate not going down anymore," said a trader.
"The Ivory Coast news over the weekend has provided a bit more of a supportive backdrop," the trader added, noting there had been talk of pod counters fearing to go into the bush to assess the West African country's crop.
"People tend to be revising their grinding numbers as well. A couple of the independent analysts have raised their demand estimates," the trader added.
In Ivory Coast over the weekend, unidentified gunmen attacked police stations in the main city of Abidjan and in a nearby town.
The ruling FPI party has blamed the violence, in which seven members of the security forces were killed, on the rebels who control the north.
The rebels have denied the accusations and their leader, Gallium Soro, said the attacks were "a poorly staged set up" by government forces, Reuters reported from Abidjan.
The accusations fuelled rising political tensions at a time when the nation's fragile peace process enters a crucial phase with the rebels due to start registering for disarmament on Sunday.
Presidential elections are slated for October. In neighbouring Ghana, the world's second biggest cocoa producer, the Bank of Ghana's Monetary Policy Committee said the country earned $500.4 million from cocoa exports in the first half of the year, down from $564.9 million in the same period last year.
The group attributed the decline in earnings to a fall in cocoa output. "After topping 700,000 tonnes in 2003/2004, cocoa production in 2004/2005 is estimated at some 550,000 tonnes," Bank of Ghana said in a statement.
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