NYBOT cocoa front futures slumped over 4 percent to a 22-day low Wednesday as speculators sold on healthy crop prospects in the Ivory Coast, the world's largest cocoa producer, traders and analysts said.
"The news of the rain certainly was the catalyst to spec liquidation," said Jim Corridor of Liberty Trading Group. "We think the funds are a little bit too long." Benchmark September cocoa settled down $72, or about 4.4 percent, at $1,581 a tonne, near the lower end of its $1,575-$1,664 trading range.
The last time the September contract settled this low was on July 20. December cocoa fell about 3.9 percent to settle at $1,616 or $65 lowers, after trading from $1,607 to $1,692. Longer dated contracts ended down $63 to $67.
Sagging cocoa prices in trading were pushed further after Reuters in Abidjan had reported data showing above-average rainfall for most of Ivory Coast's main cocoa growing regions in the first 10 days of August, traders said.
"The assumption is that (the above-average rainfall) will help the crop but it may or may not be too late," said one trader.
Farmers in Ivory Coast, which grows about 40 percent of the worlds cocoa, had been worried that a lack of rain in July a crucial time for the development of pods could harm the 2004/05 main crop.
Weather service Meteorlogix forecast scattered showers and thunderstorms in West Africa over the next two days. "Moisture is currently favourable for developing cocoa," it said.
Final estimated cocoa futures volume fetched hearty 37,156 lots, compared with Tuesday's 21,613 lots.
Open interest in the cocoa market fell 975 lots to 115,613 lots as of August 10. Technicians put new support for September cocoa at $1,572 and $1,540 with resistance at $1,633 and $1,664, traders said.
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