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CSCE cocoa ends higher despite trade selling

NEW YORK: CSCE cocoa futures settled higher on Friday, with good support from industry sources and resistance from trade and origin sellers keeping it in the sideways pattern seen throughout the week, traders said.

Bean prices eased after the opening and remained lower most of the trading session, picking up a few minutes before the close when short covering came in, floor traders said.

"The market was trapped into a range. Overhead resistance was coming from speculative liquidation and origin selling and support was coming from trade and industry scale down buying," a dealer said.

Active March cocoa rose $12 to finish at $853 a tonne, trading between $855-$836. May gained $15 to end at $880. Back months ended $10-$12 firmer.

Dealers said that without any further incidents in Ivory Coast the market will remain balanced for the most part.

"Speculators are in both sides of the market, you see them covering shorts and liquidating longs on some of the small movements. But basically you are looking at $14 range. so the market is relatively quiet. We don't expect much to happen," one broker said.

LIFFE cocoa ended higher on short covering, fuelled by uncertainty over the political situation in Ivory Coast.

Front month March closed at 564 pounds a tonne, up eight pounds, trading between 566 and 555. Active May also close up eight pounds at $592 pounds.

Technically, chartists pegged resistance for March CSCE cocoa at $855-$860, while nearby support was seen at $800.

Volume traded reached an estimated 7,291 lots against the previous official volume of 5,488 lots. Call volume touched 1,368 lots while put volume reached 244 lots.

In physical business, shops and businesses in Abidjan returned to normal operations on Friday easing fears of army discontent after many shops in Plateau closed on Thursday afternoon on reports of shooting and troop movements in the city.

Tension was fuelled by rumours suggesting that army lower ranks, who staged a pay mutiny that paved the way for the Christmas Eve coup against President Henri Konan Bedie, were unhappy with the government named by military leader General Robert Guei on Wednesday.

In Brazil, cocoa grindings fell to 3,173,307 60-kg bags in 1999 from the 3,202,198 bags reported the previous year, the Bahia Commercial Association said on Friday. Brazil's cocoa grind reached 260,135 bags in December 1999, down from 277,459 bags in the same month in 1998 and 282,263 bags in November 1999.

Brazil, once the world's second largest cocoa producer, has seen its status erode in the last decade after the fungal disease witch's broom ravaged the crop in Bahia -- a northern state which accounts for some 90 percent of Brazil's cocoa. The CSCE is a subsidiary of the New York Board of Trade.-Reuters