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CSCE cocoa ends higher but further falls possible

NEW YORK: CSCE cocoa futures settled higher Wednesday but remained within their recent trading range.

Analysts still see prices stuck in a long range bearish trend.

"A lot of people are talking about the market being overdue for a correction. Just because it's overdue, does not mean it's going to happen," softs analyst with Prudential Securities, Arthur Stevenson, said.

Spot March settled up $9 at $769 a tonne and the rest rose $11, with active May settling at $806 after trading $808-797.

Bean prices came in a little higher as predicted, although light arbitrage selling saw active May dip briefly back under the $800 level, dealers said.

Trade buying into the dips and a local shortcovering rally pushed prices higher, with news of an unofficial strike at top cocoa producer Ivory Coast's main port of Abidjan, giving the market a brief pop.

Dockers launched a three-day unofficial strike on Wednesday, halting loading and unloading of vessels, union sources and dockers said.

The strike, if it is followed by all of the port's 10,000 dockers, could cause problems for exporters of cocoa.

But Stevenson said that the strike had come too late into the current marketing year to have any meaningful effect on the prices.

"The stocks are building up nicely on the importer side so for any strike that is declared now, unofficially or otherwise, its impact must be mooted simply beacause we're so far along in the season," he said.

Total exports of 1999/2000 beans since the start of the season, on Oct 1, were estimated at 735,000 tonnes by Feb 20.

Cumulative arrivals of 1999/00 beans at Ivory Coast's ports stood at around 1.0 million tonnes by Feb 20, up on 894,000 tonnes at the same time last year, industry sources said.

Final volume in cocoa on Wednesday was estimated at 3,542 contracts, compared to official turnover Tuesday of 4,731 contracts.

LIFFE cocoa ended slightly higher on Wednesday with spread trading boosting volume. Active May settled three pounds up at 575 pounds a tonne.

Traders pegged support in CSCE May at $775, whilst nearby resistance was seen at $823-25, then $834 and $848.

"I think what we're seeing here is a gradual discounting of all the negative factors, but I believe however that they remain valid," Stevenson said.

The CSCE is a subsidiary of the New York Board of Trade.-Reuters