US cocoa futures settled in negative territory on Monday, weighed down by light speculative selling and spread trading amid market expectations for steady supply, market sources said. The New York Board of Trade's benchmark cocoa contract for delivery in September shed $6 to $1,486 per tonne, after trading from $1,483 to $1,498.
"There was very good volume trading out here," a cocoa trader said, speaking from the NYBOT cocoa ring. "Most of the activity was in the spreads," he said. Dealers focused on spread trading between the September and December contracts, with the spread widening out to 42 points.
The December finished down $5 at $1,528, while back months slid $4 to $5. Traders said daily trading volume in cocoa futures had reached an estimated 17,979 lots, well above the 8,230 officially tallied the previous session.
One trader said about 3,500 contracts were comprised of Against Actuals (AAs), which is the exchange of physical cocoa for futures.
A fresh estimate for bean arrivals from leading cocoa producer Ivory Coast's 2005/06 main crop showed supply outpacing the previous season. Major exporters in Ivory Coast estimated bean arrivals at the country's ports between October 1 and July 30 reached 1.312 million tonnes, up from 1.277 million tonnes during the same time a year ago.
In London, the Liffe's September cocoa contract closed down 5 pounds at 850 pounds a tonne, having dealt from 846 to 860. Traders attributed some of the weakness in London to currency-related positioning after sterling hit an eight-week top versus the dollar.