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CSCE cocoa catches its breath to close steady

NEW YORK: CSCE cocoa futures were still being hit by

speculative and origin selling throughout most of the day before gaining a

mild amount of support from arbitrage buyers but traders caution there is still room for further downslides.

"The market is just taking a breather," said one floor trader. "The

Commitment of Traders report still shows specs net long the market. Until something fundamentally changes or that position becomes a short position,

I don't look for much of a jump here." Active May settled $6 firmer at $765 a tonne after sailing down

to 27-year lows on Friday when it traded as low as $759 amid a spate of speculative and fund selling coupled with some new short positions being initiated.

Spot on March gained the same to $740 and the rest rose $3-$4.

"There's nothing but air under the market. We need to see commercial support come into this market and, until we do, we'll just continue to drift," said James Cordier of Liberty Trading.

Bean prices came under some selling early as a carry-over from the

previous session's sell-off.

Light arbitrage buying and a smattering of extremely light commercial interest helped steady the fall. "There's nothing bullish about this market fundamentally.

Right now it's in poor man's land," said the floor trader. Concern over the amount of West African sales continues to plague the market's sentiment. As of on February 20, cumulative Ivory Coast arrivals were estimated at one million tonnes, compared with 894,000 tonnes at the same time last year.

"We should be seeing manufacturer buying coming in at these levels.

People are just keeping their hands in their pockets, waiting to see how much sales are still yet to take place out of West Africa,

" said Cordier. LIFFE cocoa ended weaker amid arbitrage selling and positions being rolled from March into May. Active May lost only one pound to 558 pounds a tonne while March shed three pounds to 509 pounds.

Traders peg support in CSCE May at $753, followed by $750, with nearby resistance was seen at $800.

"I think cocoa is an excellent value here but until sentiment changes

around we could (go lower)," said Cordier. "I think it should be bought for long-term but short-term, it's still under pressure."

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