US cocoa futures contracts closed firm on Monday, with late-day short-covering and light fund buying boosting prices off the session's lows, traders said.
"You've seen the market behave this way for some time. It opens the day weak and the bears start to feel good about themselves, and then they just don't seem to be able to settle the market lower," one trader said.
Front-month March cocoa contract, which traded in the New York Board of Trade's open outcry pit, climbed $3 per tonne to $1,634, in a trading band from $1,610 to $1,640. May settled up $5 to $1,671, after trading in a range from $1,650 to $1,675, while the rest settled up $5.
The lower sterling relative to the dollar provided the session's initial weakness, traders said. IntercontinentalExchange's NYBoT electronic platform for cocoa saw its March contract up $5 at $1,636, at 12:53 pm EST (1753 GMT), while May was up $9 at $1,675. Electronic trade is scheduled to close at 3:15 pm and reopen at 7:00 am on Tuesday.
Volume traded in the pit near the close was estimated by NYBoT at 12,311 lots, down from the 15,356 lots officially tallied on Friday. NYBoT estimated the volume of electronically traded contracts at 2,196 after the pit session closed.
On Friday, the first session for electronic trade, NYBoT officially tallied 1,390 lots on Friday, when the March contract settled at $1,631 per tonne. In London, the Liffe March cocoa futures contract closed 4 pounds higher at 896 pounds per tonne, in dealings from 869 to 899 pounds. May rose 5 pounds at 914 pounds, trading in a range from 887 to 916.
In West Africa, Nigeria's cocoa output grew at an average of 18 percent a year in the last three years to 400,000 tonnes in 2006, President Olusegun Obasanjo said on Monday. Obasanjo said in a speech at the third National Cocoa Day celebration that Nigeria's cocoa production would reach the half million tonnes mark next year, while the world's fourth biggest grower aims to become number two by 2010, overtaking Ghana.
Patchy rains in Ivory Coast's cocoa-growing regions last week ended a weeks-long dry spell, but growers said on Monday more showers were needed ahead of the smaller mid crop season running from April to September. Farmers in the western Daloa area, however, have been growing increasingly anxious as the region has still not seen any rainfall since late November.
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