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CSCE cocoa ends just off highs, May hits $900

NEW YORK: CSCE cocoa futures settled in majority just off their highest level in nearly nine weeks on Wednesday, after fund buying and some late trade short covering, traders and brokers said.

"I think prices are on a run of technical short covering and funds going long. But whenever that stops you will see a 10 percent vacuum in prices and we go back to $800," one senior New York-based trader said.

"I wouldn't get too excited yet."

Active May settled at $898 a tonne, its highest level since January 13 and $15 firmer, having traded between $900 and $874.

The rest of the board gained between $15-$16 a tonne, with the exception of spot March, which expires on Thursday, settling down $34 at $846.

July cocoa closed at $924, up $15, trading $925-900.

Bean prices saw interest from funds and trade buying into dips in morning activities, with some local liquidation and speculator profit taking initially blocking any attempt to get May to $900.

"You've got some fund buying and a little bit of trade buying. They're all kind of looking to buy dips, thinking there're some stops around $900 there in the May, but I don't know if there really are," one floor trader said.

But as previous highs were taken out, further buying was attracted onto the market, with some light manufacturer selling at the highs, traders said.

"For a number of reasons I think we've got a base secured below us. We've broken some quite important down-trends that have been intact for quite a while," UK-based technical analyst Cliff Greene of independent research company Trend Analysis said.

Greene said that he classed this latest move higher as "an immediate reaction following completion of the bear cycle".

"Once that is complete, I think we'll be settling back into a bit of a range."

One senior trader said that recent market talk concerning problems with major Ivorian coffee and cocoa shipper SIFCA had had no relevance to prices at all.

"If (the company) were in trouble, it would have been bullish to the diff (differential) structure and it hasn't been," he said.

SIFCA, 30-percent owned by US giant Archer-Daniels Midland, has been the object of numerous market rumours recently, and considerably slowed its purchases of coffee and cocoa in February.

London's LIFFE cocoa ended mostly at the day's highs on general buying across the board amid spread business. May last traded 13 pounds higher at 660 pounds a tonne, having moved between 661 and 646 pounds a tonne.

Volume traded on the CSCE Wednesday was estimated at 9,999 lots, compared to Tuesday's official tally of 9,294 lots.

Greene pegged support in CSCE May at $880-85, "with better support sitting down in the $850-40 area". Resistance nearby was seen at $900-905, then $920, followed by $950.

"I think we're at the top of the range now. The specs may try to go for that $915-$925 level. But...if they don't do it successfully, the market could drop easily by $50," the senior trader said.

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