20000312

CSCE cocoa drifts to low close in dull trading

NEW YORK: CSCE cocoa futures meandered lower to close the week on a sour note with little interest aside from locals kicking it around and some switch activity, according to floor traders.

"There was lackluster trading for the majority of the day," lamented one floor trader. "I was surprised the volume was as good as it was."

There were around 400 AAs (against actuals) mixed with May-Dec, and May-Jul switches but traders said the market lacked steam.

Active May settled at $849 a tonne, $3 weaker, after trading between $861 and $845. Spot March gained $21 to $840, while the rest lost $2 to $5, with July cocoa closing at $874, trading $885-870.

"March is at the end of its game so the price there will be erratic," said Walter Spilka, softs analyst with Salomon Smith Barney. "Cocoa has been interesting in the sense that prices have been coming down since (around) the first day of the (main crop) season on October 1."

Bean prices gained some firmness in the previous session from funds and short-covering but players sat on the sidelines Friday, leaving prices to drift on lack of interest.

"About six or eight sessions ago, it bottomed out and started to move higher but the fundamentals have been bearish. Prices have bounced up mostly because when prices come down as far as they have, at some point there will be no selling interest," said Spilka.

"A combination of bottom picking by speculators and some short covering is what carries it higher. Fundamentally, the only that has changed is that we have passed the main crop peak in the Ivory Coast."

Market participants continue to eye the latest arrivals figures from the top world cocoa producer Ivory Coast, as well as final crop figures from the two largest producers, Ghana and the Ivory Coast.

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.

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 on the day's lows in featureless trading with light origin selling weakening prices.

May ended 12 pounds lower at 623 pounds a tonne having moved between 637-628 pounds a tonne. Active July was 11 pounds weaker at 623 pounds a tonne.

Volume traded on the CSCE Friday was estimated at 5,121 lots, compared to Thursday's official tally of 14,201 lots.

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