US cocoa closed at a near 1-month high on Thursday, gaining more than 2 percent as those with short positions raced to exit a market poised to breach $1,500 a tonne.
Volume in cocoa futures dealt on the New York Board of Trade jumped a staggering 60 percent to an estimated 32,525 lots from Wednesday's official tally of 20,424 contracts. NYBOT's benchmark December cocoa ended up $31 at $1,489 after surging to $1,495 which marked its highest since September 28. The low for the day was $1,467. March closed $26 higher at $1,514 and the rest rose $24 to $26.
Dealers said a slow and steady build in speculative buying had brought the market to the current level, and predicted the momentum would last a few more days although origin selling could trim gains.
"The next target for December is $1,530," said one trader. "You've probably got about 15,000 to 20,000 shorts out there now, all going to head for the gate at the same time." Speculative short positions in US cocoa futures jumped ninefold in the week to October 20 as prices plumbed a six-week low, CFTC said in its weekly Commitments of Traders report issued Friday.
Noncommercial players, basically speculators, held a net short position of 10,408 contracts as of October 20 against 1,122 lots in the week to October 13. Dealers said prices would also be supported in the near term by political uncertainties in Ivory Coast, the world's biggest producer of cocoa. Ivory Coast was slated to hold elections on October 31 but feuding among rival factions has resulted in the prime minister of West African nation being given another year in office, a UN draft resolution said this week.
Until a fortnight ago, cocoa prices had been on the decline after Ivory Coast and No 2 producer Ghana began harvesting what was widely expected to be a bumper crop. Ivorian farmers had also staged a strike, which saw limited success in propping up prices.
In London, cocoa closed firmer on arbitrage buying as the market focused on the political situation in Ivory Coast. December settled up 14 pounds at 840 pounds per tonne and March gained 13 pounds to 857 pounds. Total volume amounted to 4,678 lots.
Comments
Comments are closed.