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CSCE cocoa springs back on spec, local buying

NEW YORK: CSCE cocoa futures finished firmer on Wednesday when industry interest picked prices up from near four-week lows, attracting speculative fund buying, traders and brokers said.

"Certainly there was some speculative buying after the market reversed off the low. But I think it was some industry buying that prevented the market from extending losses," one trader said.

Active March closed $16 higher at $844 a tonne after trading $845-$815. May gained the same to end at $873 and the rest rose $11-$15.

Bean prices fell after the opening bell, coming under pressure from further speculative selling, followed by the locals, taking out some light stops, floor traders said.

But as selling dried up, the ring was caught short and covered their positions, allowing the market to rebound after triggering stops above $832, traders said.

"Locals got caught short...and then there wasn't a great deal of selling. Good trade buying came in and touched of some stops from 32 ($832/tonne) upwards," one broker said.

"At the lower level, near where the stops were -- at 820ish -- that attracted some trade and industry offtake, which has been around for the past week or so. That absorbed the stops," another trader said.

But he noted that New York bean prices were still stuck in a range, adding that Wednesday's bounce was aided by an absence of hedging. "We're not seeing much hedge selling around these levels. That doesn't mean that if we pop above $850 they won't come back again. But for the moment they're less inclined to follow it down,"

London's LIFFE cocoa firmed up, but was unable to break out of its current range. Active March closed six pounds up at 595 pounds a tonne.

In fundamental news, Ghana cocoa purchases to the end of the 11th week of the 1999/00 season were a cumulative 314,346 tonnes, compared with 288,844 at the end of the corresponding week of the year-earlier season.

Technically, chartists pegged nearby resistance for March CSCE cocoa at $856-64, while nearby support was seen at $824-20, then all the way down to $804-800.

Volume was an estimated 10,329 lots against Tuesday's official volume of 14,514 lots.-Reuters