New York cocoa ends at a two-month high

US cocoa futures rallied 3.5 percent, or $50 a tonne, on Thursday as fund and speculative buying boosted prices to a 2-month peak amid reports of a reduction to Ivory Coast's main cocoa crop, market sources said.
"We filled an upside gap on some spec and fund buying which ran into some origin selling at the top of the range," said one cocoa dealer.
The New York Board of Trade's (NYBOT) active March cocoa contract ended $50 higher at $1,465, its best settlement since September 29.
Trading ranged from $1,425 to $1,474. "Technically, the market held every time we dipped below $1,350 good manufacturing buying was seen.
At those levels, we tend to have a big speculative short position, but we have just taken that out in the last CFTC report, so I think the market will continue to extend from here," said a cocoa broker.
May cocoa shot up $49 to $1,484 and the back months settled $48 to $50 higher.
NYBOT final cocoa volume was estimated at 15,647 lots, nearly three times that of Wednesday's official count at 5,410 lots.
"There has been good buying recently.
Paper was detaching from the physicals.
We had high differentials and low paper prices and now I think the market is reaching up to get some cocoa, which is healthy," said one cocoa merchant.
Reports out of the Ivory Coast on Wednesday that its main crop would be less than one million tonnes fuelled the buying today, dealers said.
"People on the ground there are talking about having the season end but this is what you always hear around this time of year.
It may just be a buy-the-rumour scenario," he said, adding that additional cocoa will continue to come into the market but that pressure would be a little bit more on the buyers.
Variable weather and farm problems will reduce Ivory Coast's main 2005/06 cocoa crop to around 950,000 tonnes, or 14 percent below previous estimates for an October-March main crop of at least 1.1 million tonnes, a state cocoa expert said on Wednesday.
Meanwhile, below average rains in seven out of nine Ivory Coast cocoa-growing regions during the last 10 days of November added to the idea of lower crop estimates. Open interest eased 82 lots to 123,201 lots as of November 30.