US cocoa futures ended in the red on Tuesday after quickly turning on their heels in late trading on weak technical signals and a lack of follow-through speculative buying, traders and floor sources said.
"As soon as we hit unchanged, there were various brokers and sellers around the ring who were selling with reckless abandon," said one floor source on the New York Board of Trade (NYBOT).
"Then we ran into some light buying with some locals who were covering their short positions," he said. Other traders agreed, citing a late technical failure in the market.
NYBOT's most-active December cocoa contract fell $16 to settle at $1,440 a tonne, within the bottom half of a $1,434 to $1,478 trading range.
March 2005 dipped $15 to $1,456, while distant futures shed $12 to $15. Cocoa prices opened firmer and stayed aloft most of the session on speculative fund buying on news that major cocoa exporters in Ivory Coast had closed their warehouses because of too few deliveries from striking farmers.
But trading volumes were thin, and the December benchmark failed to break above key resistance at $1,480. Traders said a lack of follow-through buying spawned some speculators to take some profits, which in turn triggered, further selling.
NYBOT's estimated cocoa futures volume just before the market closed reached 4,423 lots, compared with 3,012 lots the previous session.
Open interest in NYBOT cocoa rose 119 lots to 120,632 lots as of October 18.
On the charts, traders and analysts pegged technical support for December delivery at $1,425 and then at $1,390, with resistance at $1,480 and then at $1,543.