London cocoa futures failed to hold at an earlier six-week high at the close on Thursday, as the latest fund-inspired short covering rally stalled, allowing trade profit-taking and origin hedging to take the upper hand, traders said.
Prices earlier sped to a peak of 845 pounds - the September contract's highest since June 1 - having gained more than four percent in the previous session when funds reversed their recent selling spree.
But the market then failed to hold a key resistance level at 820 and tumbled to close in negative territory, which left prices vulnerable to further deterioration.
"This is a very fickle market," one trader said. "It's all speculative action, short-covering, but one minute it's there and the next it's not."
He said the market, which traded a healthy volume of 26,705 lots, had seen good two-way action throughout the day, with funds covering, trade and industry profit-taking, coupled with producer hedging.
The July/September spread was particularly active around 24/25 pounds discount.
Most active September closed three pounds softer at 807 a tonne, having swung in a wide 845-800 range, while front July gave back six to 782 pounds.
Back months settled unchanged to slightly higher.