US cocoa futures ended on higher ground on Wednesday, boosted by a combination of currency-related activity, speculative buying and limited producer selling, traders said.
New York Board of Trade benchmark cocoa for December delivery rose $23 to settle at $1,594 a tonne after trading from $1,563 to $1,610.
Longer-dated cocoa futures advanced $24 and front-month September, which has its first notice for delivery on August 18, gained $17 to conclude at $1,541.
"There were a few things that played into the rally: Spec buying, and it was getting larger at the higher levels, and you had a weak dollar, you had local short covering and a lack of origin selling," said a cocoa trader at a commodity brokerage.
"This market is being dictated by speculators and currency, and not by any change in fundamental perception.
But as it stands now, the specs have shown themselves over the last couple of weeks to be more net buyers than anything else," the trader said. Indeed, by August 8, non-commercial players held a net long position in cocoa futures of 29,595 contracts, up from 28,595 lots on August 1.
In currency trading, the dollar slid against most currencies on Wednesday after a tame reading of underlying US inflation reinforced the view that the Federal Reserve may not need to raise interest rates further to ward off pricing pressures.
A weaker US currency generally makes dollar-denominated commodities more attractive to investors, particularly compared with the sterling-denominated cocoa market in London.
Life's December cocoa contract finished up 5 pounds at 882 pounds a tonne. The pound rose too as high as $1.9024 in the session before dipping back down to $1.8985 by 1:00 pm EDT (1700 GMT). NYBOT cocoa volume reached an estimated 14,364 contracts, traders said. Contract switches amounted to about 6,000 lots.