CSCE cocoa futures closed modestly lower on Tuesday as short-term speculators liquidated longs or added to existing short positions after a recent advance to a three-week high, traders said.
"Specs are still short this market and they haven't been convinced they should cover their positions.
Fundamentally and technically the market is holding in a range, waiting for something to knock it down," said Ann Prendergast, softs analyst with Refco Inc in New York.
The active May cocoa contract ended $14 lower at $1,479 a tonne, near the bottom of a $1,476-$1,494 range. On Monday the May contract reached its best level since March 2, a three-week high.
"The potential for the market to move lower will hinge on supply prospects as the main crop season draws to a close at the end of March, but renewed civil unrest remains a background supportive factor," said another analyst, referring to the political situation in the world's top producer Ivory Coast.
In fundamental news, Ivory Coast's president and his opponents have agreed to hold talks aimed at breaking a political impasse threatening the fragile peace process there, officials said on Monday.
But an alliance of President Laurent Gbagbo's critics, including rebel forces and a major opposition party, said it would still fulfil its vow to march on Thursday in the main city Abidjan despite an official ban on protests.
July cocoa slipped $15 to close at $1,480, with a $1,479-$1,495 range. The back months fell $13 to $15. Estimated futures volume slowed to 5,885 lots on Tuesday from the 9,071 contract pace on Monday.
In the adjacent options pit, an estimated 895-call option traded and some 189 puts. Certified stocks of cocoa beans in warehouses of storage companies licensed by the exchange dipped to 1,561,777 60-kg bags on March 23 from 1,597,806 bags on March 22.
Chartists pegged nearby support at $1,465 and then $1,450, with resistance at $1,493 a tonne and $1,510. "Cocoa prices consolidated in a narrow range on Tuesday after on Monday's drive higher.
With the weak close on Tuesday, we'll probably head lower," said one technician. CSCE is a subsidiary of the New York Board of Trade.
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