London cocoa ends modestly higher

London Liffe cocoa futures finished modestly higher on Monday, as the market found its footing after a sell-off to 2-1/2-year lows at the end of last week, with traders trying to gauge whether the market would enter a new, lower trading range
"We're still trying to throw off the bear mantle, but the market's been struggling with Ghana (sales) in the market last week which has been quite aggressive and the specs can still sell," one trader said.
Dealers said trade had been subdued with New York markets shut in observance of the Independence Day holiday.
Benchmark September cocoa finished one pound firmer at 766 a tonne on volume of 847 lots from total turnover of 2,839.
The contract held above Friday's contract low of $760 a tonne, which was also the lowest level for a second month since November 7, 2001 when it traded down to 748 pounds. Spot July gained one to 747 pounds on just 451 lots.
Cocoa prices have been steadily falling since scoring multi-year peaks in October 2002 around 1,600 pounds, with two attempts to move higher last year, in February and August, both ending in failure, due mainly to oversupply.
Fears that civil war in top grower Ivory Coast would disrupt output have also waned as the nation continues to churn out as much cocoa as before the unrest, adding to downside pressure.
Prices are down around 16 percent since the end of 2003 and have been trading in a broad 1,000-775 trend from mid-December 2003 until Friday's break down out the lower end of that band.
"We're all wondering whether this is a false break on the downside, or if we're embarking on a new trend," one trader said.
Origin sales, mainly from Ghana but also from Ivory Coast, have put prices under pressure recently.
Traders said they expected support for September to hold in the short-term at Friday's 760 pounds low.
The market was also closely monitoring rain levels in West Africa to see whether current dryness would affect the developing 2004/05 (September-October) main crop.
Rains were significantly below average in Ivory Coast's cocoa growing areas during the last 10 days of June, but analysts and farmer said the ground was still moist enough after heavier downpours earlier in the season.