US cocoa futures fell to contract lows on Thursday for the second consecutive session, depressed by a continuation of managed-money liquidation and currency activity, traders said.
The New York Board of Trade's active cocoa contract for December delivery settled down $10 at $1,342 a tonne after penetrating a fresh contract low $1,337, or $14 under the contract floor of $1,351 posted on Wednesday.
It was the weakest closing price for a front-month delivery since August 17, according to NYBOT historical price data. Among other cocoa futures, March slid $12 to end at $1,380, just $2 north of contract low of $1,378.
Back-month deliveries finished down $9 to $10. Futures trading volume at an estimated 9,746 lots was less brisk than on Wednesday's official turnover of 10,783 contracts.
"The funds weren't as aggressive today as they were in the week. They sold 2,200 new positions in the December," said a trader. "We got to a new low and there was some commercial and trade buying," he said, adding, "at these levels cocoa is not coming to the market right now."
A rising dollar versus sterling prompted light speculative selling here due to the currency arbitrage between the cocoa markets in New York and London.
The benchmark cocoa futures contract in London settled at 793 pounds a tonne, up 4 pounds on the day. Market players are gearing up for top cocoa producer Ivory Coast's main crop, which generally runs from October through March.
Some cocoa traders have been betting on favourable weather to pave the way for a total 2005/06 crop near the record 1.4 million tonnes produced in the 2003/04 season.
However, rains were below average in five of Ivory Coast's nine main cocoa growing areas during the second 10 days of September, according to weather data from Ivory Coast.
More showers and cooler weather are needed for favourable development of Ivory Coast cocoa, US forecaster Meteorlogix said in its daily outlook.
Meanwhile, more cocoa is being smuggled from Ivory Coast to countries including Guinea and Burkina Faso, where buyers pay higher prices, merchants told Reuters.