New York cocoa futures rallied over 2 percent on Tuesday, propelled by trade and speculative buying amid a lack of producer selling, market sources said. "There was some good spec buying on the close, and there didn't seem to be much selling around," said a trader on the floor of the New York Board of Trade. "But I don't know where all of this buying was coming from.
It could've been funds adding to their positions or new longs coming in," he said.
The New York Board of Trade's front-month March delivery settled up $36, or 2.4 percent, at $1,561 a tonne, just $6 shy of the top of a $1,530-$1,567 daily trading band and the loftiest close since last on Thursday when it ended at $1,577.
The May contract likewise advanced $36 to $1,568 a tonne and more distant deliveries rallied $33 to $36 a tonne.
Last on Thursday, cocoa futures rose to a five-week high on market concerns about the prospects of flagging production, poor weather and continued political tension in Ivory Coast, the world's biggest cocoa producer.
But cocoa futures retreated during the past two sessions as investors took profits in order to square their positions at the end of the month, traders said.
The source told Reuters in Abidjan that leading exporters had declared about 100,000 tonnes of cocoa for export in the week of January 24-30, much higher than the weekly average.
The revised exporters' figures showed arrivals of between 730,000 tonnes and 740,000 tonnes.
In neighbouring Ghana, the world's No. 2 cocoa grower, production in the 2004/05 season is expected to be near 700,000 tonnes, Kamei Sarong, chief executive of the country's cocoa regulatory body Cookbook said on Tuesday.
The smuggling is induced by higher farmgate prices in Ghana compared with the Ivory Coast. Still, analysts expect a cocoa deficit this year.
"Based on the way things are right now, we are in a deficit situation globally," said Shalom Sanki, an analyst at Friedberg Mercantile Group Ltd in Canada.
Estimated final cocoa trading volume on NYBOT reached 10,825 contracts, compared with Monday's official count of 12,609.
On the charts, traders put technical support for March cocoa at $1,530 a tonne, and then $1,500, with resistance at $1,596 and then $1,628.