London cocoa futures closed in positive territory on Tuesday, rebounding from a correction on Monday after reaching seven-month highs last week. The gain is seen as a temporary rebound with further losses expected later this week on expectations of a surplus in supply for the 2003-2004 season.
The market is awaiting information on cocoa pod counts of the mid-crop in West African producers next month.
"Nothing indicates the harvest will be bad at this stage," a trader said. "I don't believe fundamentals reflect the true value of cocoa at the moment and we anticipate some selling off in the next few days.'
"Industry isn't buying and manufacturers have good cover," the trader added.
The benchmark December closed up six pounds at 936 a tonne.
Calyon also said yesterday that the gain of about 25 percent over the past three weeks was overdone. The commodities trader predicted a global surplus of 177,000 tonnes, up from last month's estimate of 82,000.
Technical analysts earlier said cocoa futures were likely to pull lower again, with a break below 919 seen taking the market down towards 900 a tonne.
In fundamentals, cocoa arrivals in Ivory Coast, which grows 40 percent of the world's beans, reached 1,331,600 tonnes between the start of the 2003/04 (Oct/Sept) campaign and June 30, official data from the Coffee and Cocoa Bourse (BCC) showed on Tuesday. The Ivorian president, rebels and opposition leaders are due to begin new talks in Ghana on Thursday aimed at reviving a moribund peace deal. Ivory Coast remains split in two after a civil war.
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