New York cocoa futures firmer on flagging dollar

New York cocoa futures edged up Tuesday, with a weak US currency attracting investor demand for the dollar-denominated commodity, traders said. The dollar slumped against sterling - the currency of cocoa futures in London - after monthly data showed British mortgage approvals had picked up in February while another report showed US consumer confidence weakened in March.
"Today it was a little bit of a currency move, which is why we are up in New York and London is down," said a trader. "There was some fairly good spec buying earlier on but then it dried up."
The New York Board of Trade's benchmark May cocoa contract rose $11 to settle at $1,581 a tonne, after dealing from $1,576 to $1,593.
The July contract advanced $13 to end at $1,600, while more distant deliveries climbed $14 to $17.
In London, Liffe's benchmark cocoa prices finished modestly weaker across the board. "We saw a little bit of fund activity on the buyside today," said a trader in New York.
"But in terms of volume, it really wasn't very impressive today. Basically, the market is recuperating from its losses yesterday, and we are back to square one from the beginning of the week," he said.
Estimated trading volume in NYBOT cocoa futures fetched 7,448 lots, compared with Monday's official tally of 4,979 lots.
Traders said the market appeared to be consolidating following sharp price swings over the past three weeks.
On March 17, the May contract peaked at $1,850, the highest for a benchmark delivery in 22 months. Since then, prices have fallen about 15 percent.
"I think the cocoa market has been traumatized by the move over the past three weeks. The fundamentals, if anything, are a bit more supportive for cocoa, but I think the market needs to find its feet now," said a trader.
Indeed, the International Cocoa Organisation expects a global supply deficit of about 50,000 tonnes in the 2004/05 season, compared with a 233,000 tonne surplus the previous year.
Technically, Dan Chesler, an independent analyst, pegged key support for May cocoa at $1,530 and then $1,472, with resistance at $1,671, and then $1,705.