London cocoa falls on weak New York, key support holds

15 May, 2004

London cocoa prices fell on Friday following a weaker New York market and sliding through several sell stops, dealers said.
But the market managed to avoid new negative territory as industry buyers emerged at the bottom of the range and the 787 pounds-per-tonne level, basis July, held.
Prices hit a 29-month continuation low at this altitude last month and several attempts to pierce that level since then have been unsuccessful.
Benchmark July, which became front month on Friday after the May expiry on Thursday, lost 11 pounds to settle at 794 per tonne on 3,430 lots, out of a total turnover of just 7,265 lots.
Second month September lost 11 to end at 806, having moved 1,147 lots in an 813-799 range.
Yet traders said support was thin and fresh lows could be around the corner.
"The 787 (basis July) is the level we need to hold and as long as we don't break that, we should be all right," a trader said.
A weaker pound, which hit a five-month low against the dollar on Friday, helped to support London prices as they were relatively more attractive versus New York dollar-based ones.
"But it doesn't look very good. The industry has been buying a bit, fixing a bit, obviously not pushing the market higher because I guess it looks to them as it can go cheaper.
"Probably they will try to make the market collapse but didn't happened today. If it breaks 787, down we go to 750."

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