US benchmark cocoa futures slid about 2 percent to a one-month low on Tuesday, with follow-through speculative selling weighing on the market for the fifth consecutive session, traders said.
The New York Board of Trade's front-month September contract declined $28 to finish at $1,402 a tonne, the lowest since July 8, when the contract plunged to a floor at $1,377 before ending at $1,398.
Today, the contract traded at $1,398. "We saw some more speculative long liquidation based on the poor technical performance we saw the previous several days," said one broker. "We are finding there is no bullish fundamental reason to supporting the market, and with all of the spec longs on the defensive and the industry fairly well covered, the market is having an easy time pulling back again," he added.
Steady speculative profit-taking and fresh selling since climbing to a five-week high of $1,505 on August 3 has dented the September contract. NYBOT-certified cocoa stocks in the United States are up about 54 percent from the same period last year.
Spread trading ahead of the front-month contract's first notice day on August 18 accounted for a little less than half of the daily futures turnover of an estimated 18,352 contracts, traders said. "A lot of spreads were done and there was a lot of spec selling," said one trader. "There are a lot of specs that are still short so they are also rolling over," he said.
Among other cocoa contracts, December slid $30 to end at $1,438 a tonne, and back month contracts lost $28 to $31. On the charts, one market player pegged support in the September contract at $1,391 and then $1,377, with resistance at $1,428, and then $1,469. In London, Life's September contract finished at 827 pounds a tonne, down 1.3 percent.
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