The US cocoa fell almost 1 percent on Monday as steady arrivals at ports in Ivory Coast, which is in the midst of its main cocoa harvest, forced more selling pressure on the market.
On Friday, New York Board of Trade cocoa futures had ended more than 1 percent down, squaring most of the previous session's gains, as speculative sellers emerged ahead of the weekend. The market remained in the red as the new week began, trading at less than half of its previous volume.
"The arrival of the Ivory crop is forcing speculators off the market," said a NYBOT trader. "As it is, price charts look lousy and the specs are now really net short though not very much."
Speculative long positions in US cocoa futures declined by nearly 80 percent in the week to October 3 as prices fell almost 3 percent in the period, trade data released on Friday showed. Non-commercial players in cocoa - comprising basically speculators - held a net long position of 984 contracts as of Tuesday, down from 4,485 a week earlier, according to the Commodity Futures Trading Commission's weekly Commitments of Traders report.
At the same time, open interest in cocoa futures on NYBOT rose to 146,930 contracts from 140,798, indicating a wider number of investors who had "sold the market short," expecting prices to fall. At Monday's close, NYBOT cocoa for December delivery ended down $14 at $1,437 a tonne, after trading between $1,453 and $1,435. March, the nearest forward contract, was also off $14 to settle at $1,473. The rest of the complex fell $14-$15.
Total trade was estimated at 4,545 lots, versus Friday's official count of 9,253 lots. Dealers said NYBOT cocoa may see more limited activity on Tuesday with an industry golf outing scheduled in New Jersey. Cocoa arrivals at ports in Ivory Coast reached around 20,000 tonnes for October 1-8, exporters said on Monday, as bean deliveries continued to gather pace despite a delay to the official start of the 2006/07 campaign.
Residents near Ivory Coast's main port of Abidjan blocked roads on Monday in protest of plans to store toxic waste there temporarily, preventing cocoa trucks from reaching exporters' warehouses, shippers told Reuters. But traders said the protest was viewed as a temporary problem, unlikely to have any long-term impact on cocoa deliveries to the port.
London cocoa futures also closed down on Monday on light origin hedge selling. December cocoa settled down 8 pounds at 823 pounds a tonne, near the bottom of the day's 833 to 822 pound range. Total volume was a light 4,104 lots.