US cocoa futures advanced on Thursday for the second consecutive day, fuelled by a lack of producer selling and a flagging dollar, market sources said.
The New York Board of Trade's (NYBOT) active March cocoa contract rose $13, or 0.9 percent, to conclude at $1,463 tonne, after trading from $1,442 to $1,468. May cocoa advanced $12 to end at $1,481, while back month contracts gained $11 to $12.
"The market remains firm because you don't have the amount of origin selling pressure that most people expected from West Africa at this time of the year," said a source at a commodities brokerage.
"Today, we had a huge impact from the dollar," the source said.
"A lot of the market is just adjusting to the currency, and we do have a weak dollar which is another reason why we were able to pick our head up," he added. The greenback fell on Thursday on comments by European and Japanese central bank officials that suggested interest rates in those areas could rise next year.
A depressed dollar, particularly against the British pound, generally incites arbitrage-related buying here and selling in London's cocoa futures market. The Life's active March cocoa contract settled down 0.1 percent at 872 pounds a tonne.
NYBOT cocoa futures trading volume reached an estimated 6,388 lots, down from the 9,006 lots officially tallied the previous session. Meanwhile, Ghana, the world's second biggest cocoa producer after Ivory Coast, is expected to produce no more than 600,000 tonnes of cocoa in the 2005/06 season, private industry sources told Reuters in Accra.
The estimate falls short of state regulator Cookbook's forecast of 650,000 tonnes in September, with industry sources citing a lack of rain for the anticipated crop decline. In neighbouring Ivory Coast, limited rains and poor maintenance of cocoa plantations were slowing the growth of pods, farmers said on Thursday, providing more evidence of an expected tail-off in production in the new year.