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CSCE cocoa ends marginally higher, still bearish

NEW YORK: CSCE cocoa futures settled slightly higher on Wednesday, as the market settled down after the previous session's sharp fall to more than 25-year lows, traders and brokers said.

"The market is just shrugging off the fact that we're at historical lows down here. It's a fundamental scenario that seems very bearish for price. There's plenty of crop about," Scott Meyers, technical analyst with Pioneer Futures said.

Benchmark March cocoa CCH0 finished $3 higher at $766 a tonne, just off the day's low of 763. The contract reached a high of $779.

The rest of the board rose by just $1, with second position May closing at $797.

Light trade buying kept the market from falling back sharply, although continued arbitrage selling kept downward pressure intact, traders said.

"Below $800 you're still bearish and you probably will see little activity. As we get above $800 on a settlement basis, you'll probably start to see some people covering their shorts," Meyers said. "But for now it looks sloppy."

In London, LIFFE's March cocoa ended nine pounds higher at 530 pounds a tonne, on some industry interest and as shorts continued to cover.

Technically, traders said nearby support for March cocoa should now be at $757, followed by $750 and then $725.

Traders pegged nearby resistance in the contract at $800, then $814.

Volume traded Wednesday reached an estimated 12,224 lots against the previous official volume of 17,768 lots.

The nine-day relative strenth index (RSI) of March cocoa remained heavily oversold at 17 at the close on Wednesday, compared to 13 previously.

Technicians normally believe an RSI reading of 30 or less is an indication that the market is oversold, while 70 or more is usually a sign it is overbought on a short-term basis.-Reuters