US benchmark cocoa futures fell about 1 percent to a one-week low on Tuesday, depressed by speculative liquidation as a resurgent dollar weighed on the commodity sector, traders said.
The New York Board of Trade's active cocoa contract for July delivery lost $14 to settle at $1,460 a tonne, near the floor of a trading range from $1,457 to $1,481. It was the contract's lowest finish since May 30.
September shed $17 to conclude at $1,489 a tonne and back months declined $14 to $17. "It was a combination of profit-taking and new shorts being put into place," said a cocoa trader at a commodity brokerage. "The move on the currency was one factor," he said, adding that the market had failed to open as high as participants had expected.
The dollar posted broad strength and the commodity sector took a hit amid market worries about rising US inflation and prospects for further interest rate hikes. A stronger US currency versus sterling generally makes cocoa futures in London more attractive for buyers than their New York counterparts. The Life's benchmark July cocoa contract rose 4 pounds to settle at 853 pounds a tonne.
On the supply front, exporters in top cocoa producer Ivory Coast said cocoa arrivals from the 2005/06 crop, which began in October, were about 3 percent higher than the previous season. By June 5, bean arrivals had reached an estimated 1,184,000 tonnes, up from 1,150,000 tonnes delivered to the ports at the same time of the 2004/05 season.
"There was some good spec selling in cocoa today," a cocoa trader said, speaking from the New York Board of Trade cocoa ring. The speculators sold about 2,300 futures contracts to 2,500 contracts of an estimated total of 15,972 lots, he said.
Non-commercial participants have been gradually reducing their positions out of the July contract before its June 19 first notice for delivery. "People are going to be rolling out of the switch or getting out of their longs and hopefully taking some profit," a trader said.
By the end of trading on Monday, open interest in the July contract stood at 50,371 contracts, down 1,088 lots from the prior trading session. Open interest in September climbed 691 lots to 38,166 contracts during the same period.
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