Trade buying interest failed to pull London cocoa prices out of negative territory on Wednesday as origin sellers re-entered the fray to hedge against recent physical sales, traders said. A weaker New York market also kept prices in check, they added. Liffe March cocoa closed 12 pounds lower at 838 a tonne on 4,037 lots after trading in a 847-837 range.
A total 5,916 lots were traded, a sizeable portion of which were related to against actual trade.
"There was a fair amount of hedge-related business but trade buyers were in there too...but it's that odd time between Christmas and New Year where book-squaring could have had some impact (on prices)," a broker said.
Dealers said it was too early to properly assess the impact of the deadly weekend tsunami on cocoa flows in south-east Asia but for now, no immediate impact was seen.
The epicentre of the tsunami was near Indonesia, the world's third-largest grower after Ivory Coast and Ghana.
Ivory Coast cocoa exports are expected to suffer due to storage damage, despite a bumper crop from the world's biggest producer, economy and finance minister Paul Boon Bonaire told Reuters on Wednesday.
Production for the West African nation's 2004/05 (October-September) season was estimated at around 1.35 million tonnes, he said.
Also, Brazilian 2004/05 (May/April) cocoa arrivals from Bhatia and other states totalled 2.36 million 60-kg bags by December 28, down 18 percent from 2.87 million bags a year ago, the Bhatia Commercial Association said Wednesday.
COFFEE ENDS SHARPLY HIGHER: Trade and speculative buying helped power London coffee prices to a sharply higher finish on Wednesday, as the market continued to regain ground lost in last week's heavy sell-off, traders said.
A jump in New York arabica prices and possible fund interest also underlined the gains, they added.
Most-active January closed $34 up at $748 a tonne on 8,782 lots, while key March finished $32 or more than four percent higher at $785 a tonne on 5,508 lots after trading between $787 and $755.
A total 16,509 lots were traded.
"We unexpectedly took off higher in the morning, then New York came in around mid-afternoon...giving us another push...although it's difficult to see if we can sustain it. The market's choppy," a trader said.
Some London dealers said there were no signs that a further bout of fund liquidation was imminent, although others said this could come in the New Year, when more operators have returned from a recent fun of holidays.
Funds are thought to have a large net long position of around 40,000 lots in New York.
Also seen as supportive was a report from Vietnam, the world's top robusta exporter, which forecast on Wednesday an 11.7 percent fall in its coffee exports in 2005 after a surge in sales this year, supporting expectations of a global deficit in supplies.
The Trade Ministry report, published on its Web site at www.mot.gov.vn, forecast domestic coffee prices next month would rise to around 10,700 dong (67.9 cents) per kg as the harvest is nearing an end, from 9,900 dong to 9,950 dong this week.
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