US cocoa futures rallied Friday to close up more than 2 percent as speculative short-covering helped fuel a technical bounce from a 3-month low this week, traders said.
"It was short-covering, mainly. We had a knee-jerk reaction to a lower dollar and cocoa was extremely oversold technically," one trader said.
On the New York Board of Trade, the most-active December cocoa gained $34 or 2.4 percent to settle at $1,425 a tonne, after trading from $1,404 to $1,450.
March 2005 climbed $33 to $1,443, while distant futures advanced $31 to $33.
Yesterday, the December contract bottomed at $1,390, a three-month low and 21-percent down from its yearly peak of $1,765 on August 20. It found technical support after breaking through resistance at the $1,420 level today, traders said.
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