New York cocoa futures ended broadly firmer on Tuesday, snapping a five-day losing streak as a pummelled dollar attracted investment funds to the US market, traders said. "It has to do with the arbitrage play," said a trader, referring to the dollar's broad weakness against major currencies on Tuesday. New York Board of Trade's most-active March cocoa rose $38, or 2.4 percent, to settle at $1,595 a tonne, near the top end of a $1,570-$1,602 daily trading range.
More distant futures gained $36 to $38. The greenback fell to a record low against the euro and slid to a four-month low against Sterling. Despite a firmer pound against the dollar, London's Life's two front contracts closed up 13 pounds, taking December to 870 pounds a tonne and March to 889.
"There was probably some trade buying with some spec selling at the high end," said a trader in New York. In leading cocoa grower Ivory Coast, buyers were holding back delivering beans to ports on Tuesday because prices are not as high as they were two weeks back amid the height of violence in the West African country, reported Reuters in Abidjan.
Ivories government warplanes started bombing rebel-held towns in the north on November 4, shattering an 18-month truce and raising fears of an all-out civil war and cocoa delivery disruptions during the country's main crop harvest.
The March delivery shot up to as high as $1,808 on November 10 but has since fallen back as some calm has returned to Ivory Coast and the cocoa industry has gotten back to work.
Shortly before the market closed on Tuesday, NYBOT cocoa trading volume was estimated at 5,443 lots, compared with 4,359 lots in the previous session.
Open interest rose 106 lots to 117,211 lots as of November 22. Market interest was thin due to an abbreviated trading week, traders said. NYBOT's cocoa market will be closed on Thursday and Friday for US Thanksgiving.
Technically, a trader put support for the March contract between a gap of $1,533 and $1,487, with resistance at $1,662.