London cocoa closes lower

The London cocoa market made narrow losses on speculative and origin selling, dealers said. Benchmark March closed at 827 pounds a tonne, down four pounds after turnover of 7,284 lots from a total of 14,493. It ranged between 824 and 834. "Industry has been picking away on the dips. There's some small speculative selling and small hedge selling," a trader said.
"London has been lagging a bit. There seems to be more speculative selling in London than in New York. The New York speculators have done what they have to do."
New York's March position was off by five dollars at $1,500 a tonne. The NYBOT markets will be closed on Monday, January 17 for Martin Luther King Jr Day.
Dealers noted structural trade in London, particularly spread trading on contracts further out.
December 2005 turned over 1,255 lots before closing down four pounds at 864 while March 2006 shifted 2,297 lots and lost the same amount to settle at 873 pounds.
Market players were trying to predict the market's next direction, with some forecasting a rally once the phasing out of cocoa from the Goldman Sachs and Dow Jones AIG commodity indices ends on Friday.
Selling because of the changes helped extend a slide that started in early December when speculators who had piled into the market because of fears of civil war in Ivory Coast shed their holdings.
The potential for a rally also depends on funds' net short position in London, with estimates varying from between 5,000 and 10,000 lots.
"If we get a rally here the funds will be vulnerable but they have cocoa on the side, it will be hanging over the market," one trader said.
As for their holdings in New York, dealers expect Friday's Commitments of Traders report to reveal a significant drop in their long position. Last week's publication showed the net long position of speculators, including non-reportable positions, dropped to 13,561 lots by January 4 from 19,074 lots.
SUGAR CLOSES HIGHER: London white sugar futures closed higher on trade buying on Friday, and the market could rise again next week, traders said.
March settled up $2.70 at $261.70 a tonne in volume of 2,811 lots, having moved between $261.70 and $259.20.
May ended up $1.50 at $269.50 in volume of 1,693 lots after trading between $269.80 and $267.60.
"Today has been predominantly trade buying, and buying of the March-May spread," one trader said.
Traders said the market could move higher next week as the market focused on brisk Indian demand and Pakistani enquiries for raw sugar.