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LCE cocoa leaps to 10-month high

LONDON: Widespread, aggressive buying fired up London cocoa futures on Friday morning as prices hit their highest levels for more than 10 months.

"There are some big buyers out there -- specs, funds, all of them," said one trader. "And there is more to do."

The key second-month July contract raced through the tough upside barrier of 1,040 stg and hit 1,048 a tonne. It then pared gains, ending the morning session at 1,042 -- still a 10-month high and up 27 stg.

July has jumped 16 percent since contract lows were touched at the end of March.

"It rejected the downside, and now it's having another go on the upside," said another trader.

Morning turnover was a hefty 11,080 lots, mostly consisting of outright deals, traders said.

Fuelling the market were bullish signs on the charts, and some trading houses on the long side of the market said to be supporting the upside trend, they added.

The Dutch trading company G.W.L Kerstern could also be among the buyers, traders said.

The Dutch agricultural products group Alanheri NV ALANc.AS said on Friday it was seeking creditor protection for Kerstern, its 70-percent owned coffee and cocoa trading unit.

It said Kerstern had experienced a tough year, particularly with regard to cocoa trading.

While the premium on September continued to swell amid talk of supply shortages at the end of the season, traders said the rally could receive a setback from the U.S. Commitment of Traders Report (CFTC) due out later on Friday.

It could show net speculative long positions on the New York market sharply up from the previous report, they said.

May/July swicthes were active, trading up at 28 stg while September call options, a key driving force behind the rally on Thursday, traded 100 lots at 1,200 stg.

The next resistance level for July is pegged at 1,063 stg, followed by 1,120, analysts said.

-- Clelia Oziel, London Newsroom +44 171 542 8072