20000311

CSCE cocoa gives back gains as trade sells

NEW YORK: CSCE cocoa futures sunk to a weaker close with funds unable to sustain an early rally and trade selling prodding prices lower, according to traders.

"There was good fund buying this morning," said one floor trader. "Good trade selling sold right into it. London gave up (some) ground and we started coming off," he added.

Active May settled at $852 a tonne, $10 weaker after having traded between $884 and $847. Spot March gave back $10 to $819, whilst the rest of the board lost $7 to $9, with July cocoa closing at $878, trading $910-873.

Bean prices started Thursday's session firmer as funds were actively buying and light short-covering gave a boost, but traders came in to sell it right back down.

"This market has been moving up steadily for the last four or five sessions. It could not sustain that move today and that may reflect a reassessment of the cocoa producers alliance claiming that they would be withholding cocoa from the market," said Arthur Stevenson, softs analyst with Prudential Securities.

"That caused the market to move up for a few days. You also had some bottom-picking by technical people and that clearly fizzled today," he added.

Participants were also still keeping an eye on the latest arrivals figures from the top world cocoa producer Ivory Coast, although there continues to be scepticism about their accuracy.

Cumulative arrivals to Ivory Coast ports as of February 27 totalled 1,023,500 tonnes, with a weekly figure of 23,500 tonnes, compared to 910,000 tonnes by the same time last year.

"Everybody is looking at them but the real question one has to ask is how reliable are they," said Stevenson. "It is quite clear that the figures recently have been way inflated. They have now been revised and trimmed back but even though they are smaller, the fact is the market has come under downside pressure."

Relatively high arrival figures compared to previous seasons and expectations of a larger-than-expected crop in 1999/2000 of up to 1.3 million tonnes have been pressuring futures prices.

London's LIFFE cocoa ended firmly but off the day's highs Thursday as producer selling kept a cap on the earlier short-covering rally.

Active May LCCK0 last traded one pound higher at 640 pounds a tonne having moved between 660-634 pounds a tonne.

Volume traded on the CSCE Thursday was estimated at 14,3255 lots, compared to Wednesday's official tally of 8,116 lots.

Traders pegged support in CSCE May at $835, then $800 to $780, whilst nearby resistance was seen at $867, up to $900.-Reuters