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CSCE cocoa falls sharply when sell stops triggered

NEW YORK: CSCE cocoa futures slumped back on Thursday, when an early attempt to push higher failed to attract follow through buying, with spread activity dominating volume, traders and brokers said.

"Cocoa looks very sloppy. Technically it's unable to make strong advancements," Scott Meyers, technical analyst with Pioneer Futures said.

"Every rally since December 1 has failed at a lower level, but conversely on the other side, every sell-off since late December has failed at a higher level," he added.

Active March cocoa tumbled $23 to $823 a tonne, trading between $852-$820. The rest of the board shed $20, with second-month May ending at $855.

Local buying on the opening fizzled when expected speculator buying did not rear its head, with spread activity accounting for most of the volume traded, one floor source said.

"We came in unchanged, everybody was expecting specs to be good buyers, so locals started buying, then noticed that nothing was going on and started getting out and taking out some shorts and tried to push it down," the trader said.

Further speculative selling sent active March down to a one-week low, when commission house sell stops were triggered underneath the market.

"There seems to be plenty of (cocoa) around. There is not a lot of fundamental news to get this thing up and running and with the technicals neutral-to-weak, the market remains under pressure," Meyers said.

London's LIFFE nearby cocoa ended lower as players hedged and origins continued to sell in a market dominated by switches. Key March ended six down at 565 pounds a tonne.

Technically, chartists pegged nearby resistance for March CSCE cocoa at $855-58, then $872-75, while nearby support was seen at $815, then all the way down to $800.

Volume traded on Thursday reached an estimated 11,746 lots against Wednsday's official volume of 7,334 lots.

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