US cocoa open-outcry futures contracts closed sharply higher on Wednesday, on a late-day speculative buying spree after dip near a fresh four-week low dating back to February, floor sources said.
"The market rallied three times within the range and tried to get through some levels but just didn't manage it. Then on the close the volume just picked up," one trader said. The benchmark may contract surged $40 to close at $1,755, after trading widely from $1,758 to $1,697, filling a technical gap.
July closed up the same at $1,782, in dealings from $1,783 to $1,728. On Tuesday, both contracts slipped to new lows last seen February 14. One contracts aside, the rest closed from $40 to $45 higher. The benchmark may contract trading on the IntercontinenalExchange NYBOT electronic platform was up $34 at $1,749 at 12:43 pm EST (1743 GMT).
July was up the same at $1,776. Electronic trading ends at 3:15 pm NYBOT estimated volume around noon at 4,960 lots, compared with the 21,480 that traded on Tuesday when 9,309 of those traded electronically. The market traded lower in the session on follow-through selling from the previous session when fund liquidation triggered sell-stops and set a fresh three-week low, dealer said.
"The markets may lift slightly but return to lower levels," one dealer said, looking ahead to trade on Thursday. In London, cocoa futures closed higher due to a late short-covering rally after speculative long liquidation dominated the session, dealers said. The Liffe may contract settled 22 pounds higher at 979 pounds, with trades ranging from 949 to 988 pounds. In the West African cocoa belt, Nigeria is likely to produce 500,000 tonnes of cocoa in 2007, up from 450,000 tonnes last year, and the country will try to tap new export markets, its farm minister said on Wednesday.
Nigeria, which traditionally exports cocoa to Europe and America, was looking at India and China as new emerging markets, Adamu Belo, minister of agriculture and water resources, told reporters on the sidelines of a food summit.
A group of around 30 farmers in the world's top cocoa grower, Ivory Coast, has gone on a hunger strike to demand the replacement of the heads of industry bodies they accuse of mismanagement. The growers from the SNAPRICC-CI union want President Laurent Gbagbo to enact a decree he announced in February 2006 stipulating that the directors of the industry's management structures must be changed through elections each year.
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