CSCE cocoa closed down sharply on Wednesday after hitting a 3-week low as a higher production estimate for top grower Ivory Coast sparked speculative selling, dealers and brokers said.
"It was a formidable fall today in reaction to the higher crop estimates being circulated," said one bean trader. Benchmark March cocoa plunged $64 to close at $1,525 a tonne, nears the bottom of a $1,520 to $1,573 range.
On Wednesday's slide started in London as traders there were first to react to a new figure from an official at the Ivorian Coffee and Cocoa Bourse (BCC), who said the 2003/04 main crop was expected to reach 900,000 tonnes, up from the prior 800,000 to 900,000 tonnes estimate.
The official explained that since the December estimate was released, the BCC had conducted a survey of the cocoa growing regions and had found more cocoa than initially expected in western areas.
Trade accounts said there was talk in the marketplace that a noted private forecaster had released a new higher estimate for both Ivory Coast and No 2 producer Ghana to his clients. Specific details of the report were not confirmed.
"There is no bullish news to support the market at these levels. The funds probably came in on the short side to increase their net short position," said Ann Prendergast, softs analyst with Refco, Inc.
May cocoa skidded $58 to close at $1,520 and the back months settled down $42 to $58 a tonne. Estimated volume jumped to 12,551 contracts from 3,714 lots on Tuesday.
On Wednesday's turnover was boosted by 3,126 exchange for swaps or EFSs and 1,805 switches, traders said. In the options pit 819 calls and 371 puts traded.
Chartists lowered support for March to $1,520 and then $1,506 followed by $1,474 with resistance at $1,571. "Cocoa is still correcting the upmove from late 2000 through 2003.
We are still bullish long term. Shorter term, more testing of the $1,450 to $1,350 range appears necessary," said Dan Chesler, a commodity-trading adviser.
CSCE certified warehouse stocks eased to 1,599,567 60-kg bags on January 28 from 1,611,908 on January 27. CSCE is a subsidiary of the New York Board of Trade.
Comments
Comments are closed.