CSCE cocoa futures in New York finished firmer on Monday, hitting a two-week high on fund short-covering after on Friday's Commitments of Traders (COT) report showed a greater net short position held by the funds, traders said.
Benchmark July cocoa soared $42 to settle at a two-week high at $1,396 a tonne, after trading from $1,373 to $1,405 a tonne.
May cocoa closed up $40 to $1,396 a tonne, while back months gained between $38 and $40.
"We opened up $30 and moved higher from there on some outright spec buying and short-covering. It seemed like guys were not looking to sell down here today," said one floor source.
The Commitments of Traders report released on Friday after the close showed the net speculative short position in CSCE cocoa reached 19,511 contracts as of April 20 compared with 12,331 contracts as of April 6.
"There is a big short position in the market and guys have started to cover their positions, but they have not really put much of a dent in that net short position," said one broker.
On the physical side, analysts said that as cocoa is between its main (Oct-March) and mid (April-Sept) crops, news in the market is very quiet.
"The main news story in the market is the view that we are oversold and we need to correct. There is no weather news or shipping news out there, being as the market is between crops, so this short-covering rally may have some legs going ahead," said one analyst.
There were five deliveries on Monday against the May contract, bringing the cumulative total to 601 contracts.
Final estimated futures volume reached 8,971 lots on Monday, compared with Friday's official count of 6,169 lots.
Over in the options pit, 1,001 calls and 978 puts were traded. Open interest for CSCE cocoa eased 624 lots to 106,145 lots as of April 23.