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CSCE cocoa stages technical rally, follows London

NEW YORK: CSCE cocoa futures extended recent gains on Thursday to close sharply higher on local and technical buying largely spurred by London's rally, traders and analysts said.

"I think one's got to keep it in perspective. The overall trend, which is down, is undisturbed at this stage. It (rise) falls very much in the category of a correction," technical analyst Cliff Greene of independent research company Trend Analysis said.

Active May jumped $33 to $821 a tonne, having traded between $826 and $792. Spot March cocoa rose $32 to $791 whilst the rest of the board gained $30-$33.

Floor traders said that locals were the main buyers, with some light industry buying, in what was essentially a technically oriented session.

"We were following London, they've been goosing London up all week. I think it's pretty constructive and we'll probably do better tomorrow, which will get us through 33 ($833) in May," one floor trader said.

"You saw a stronger performance. I think that is hardly surprising in that this has been a bear market forever, but today's price action in no sense challenges the long range bear trend," Prudential Securities softs analyst, Arthur Stevenson, said.

Traders and brokers said that reports showing a reduction in cocoa bean arrivals to Ivory Coast ports in the latest week helped market sentiment.

Arrivals were estimated at 23,500 tonnes in the week ending February 26, down on 45,000 the previous week, as 1999/2000 main crop tailed off, exporters and other industry sources said.

Cumulative arrivals for the season, which started October 1, stood at 1,023,500 tonnes, up on 910,000 tonnes by the same time last year.

One trader said that a lack of speculative liquidation, and only "light, routine origin selling" also aided the market on its march north.

LIFFE cocoa ended at its highest since December 24 on Thursday as active May stole the limelight on speculative buying and fund short-covering in another switch-dominated day.

Active May gained 41 pounds to 621 pounds a tonne, the intra-day peak and its strongest level since an Ivorian coup pushed prices to 622 pounds on Christmas Eve.

Volume traded on Thursday was estimated at 9,380 lots, compared to Wednesday's official tally of 4,781 lots.

Traders pegged support in CSCE May at $753, followed by $750, whilst nearby resistance was seen at the previous high of $833, then $842-845.

"Technically, there's certainly cause for watching very closely, but as always when you have a rally things look good near the tops," Greene said.

"So there are a few points to be watching and I think they're going to have a go at them." The CSCE is a subsidiary of the New York Board of Trade. -Reuters