Heavy speculative selling depressed nearby US cocoa futures prices to their lowest in 11 months on Wednesday, with a strong dollar and bearish technical factors sparking the sell-off, market sources said. "The specs sold quite a lot today," said one floor trader. "It was a pretty big down day and the way we went out it looks like we have more damage to the downside," he added. The New York Board of Trade's July cocoa contract fell $28 to finish at $1,394 a tonne, the lowest settlement since July 2, 2004 and just $2 above a session floor $1,392.
Stop-loss selling kicked in after the July contract smashed through last week's low at $1,412 and continued to move through a major psychological barrier of $1,400, traders said.
Cocoa futures opened about $10 weaker on the heels of a rising dollar versus sterling and softer bean prices in London. A firm US currency generally encourages arbitrage selling here.
Among other cocoa futures, September lost $27 to end at $1,420 a tonne and back month contracts erased $21 to $24. Estimated trading volume in NYBOT cocoa futures rose to 17,818 lots, from Tuesday's official tally of 7,831 contracts, said exchange floor sources.
As of May 31, open interest in cocoa futures reached 131,464 lots, up 753 contracts from the previous session. The benchmark cocoa price has fallen 25 percent from peaking at $1,867 on March 18.
Those killed were members of the Guar local tribe. Witnesses said homes were smashed and burnt. US-based cocoa traders said they didn't think today's ethnic violence posed a threat to a peace agreement and ongoing disarmament talks between the government-controlled south and rebel-held north.
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