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CSCE cocoa plummets to close at new 27-year low

NEW YORK: CSCE cocoa futures retreated further on Friday, when the market suffered a fresh onslaught of fund and speculative selling, as new contract lows were set across the board.

"I've been saying that the downside is limited, although that's not to say we won't go lower," Walter Spilka, softs analyst with Salomon Smith Barney said. "But I don't think it's going to go down really sharply simply because we're already in the late stages of the main crop harvest."

Active May plunged $32 to $759 a tonne, losing four percent, having traded down to a new low of $756. It traded up to $800.

Spot on March shed $33 to $759 and the rest of the board fell $29-$31.

Bean prices came under early pressure from speculative and local selling, which initially triggered stops on the downside around the $785 area, floor traders said.

Arbitrage and fund selling gave the market a further hammering, although traders and brokers said there was good trade and industry buying into the lows.

Analysts said the market was simply coming under more pressure from expectations that West African crops were going to be larger than first thought.

"The Ivory Coast crop might be a record 1.3 million tonnes, maybe higher than that," Spilka said.

"The bottom line is that it's very difficult to tell what the crop is going to be, but the way the market is trading, it looks like production will exceed consumption by a larger amount."

In fundamental news, dockers in Ivory Coast's main port Abidjan said they would resume work on Friday, ending a three-day wildcat strike.

Workers are to return to work for the on Friday evening shift, but with a backlog of ships blocked in the port, some transporting the country's main export cocoa, full weekend working was likely.

Liffe cocoa also ended weaker after profit taking and trade activity in mostly switch dealings. Active May lost 20 pounds to 560 pounds a tonne, whilst on March sed 13 to 520 pounds.

Traders pegged support in CSCE May at $750, whilst nearby resistance was seen at $800.

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