NYBOT cocoa futures ended up but well off session highs Thursday as traders noted that the recent speculative short-covering rally had created an overdone condition in the market, which prompted origin selling and trade profit-taking at the highs.
"The market was overdone on the opening alone. We were due to come in at $1,452 on arbitrage and we came in at around $1,470 to $1,475 which was very high. We had large fund covering which took us the high at the open ... probably about 2,000 lots and once they were done, the market dried up and slowly eased off from there," a dealer said.
Benchmark September cocoa finished $6 higher to $1,425 a tonne, after trading from a session low of $1,410 to a high of $1,475, its loftiest level since May 28 when the contract finished at $1,472 a tonne. July cocoa rose the same to $1,420, while back month contracts gained $4 to $7.