Benchmark cocoa futures in New York closed lower on Monday on fund and speculative selling, weighing on values after the weak US dollar provided initial support, traders said.
Cocoa for March delivery on the New York Board of Trade dropped $11 to close at $1,484 per tonne, near the day's low, after trading in a range of $1,480 and $1,513. May fell $10 to $1,509, and traded between $1,510 and $1,534. The rest lost $8 to $9, with the exception of December that closed up $9 at $1,434.
The market was closed on Thursday and Friday for the US Thanksgiving holiday. The market opened firm on speculative buying and support from the weak US dollar relative to sterling, but it was unable to hold those levels.
"The market for the second half of the day showed some weakness and came off quietly," one trader said, adding this triggered speculative selling. "Funds continue to sell cocoa despite a weaker dollar. There were expectations for a dollar rally and that got squashed and as the funds sold," another trader said.
Estimated trading volume near the close was 6,100 lots, against the previous tally of 7,507 lots. In London, cocoa futures closed lower on fund selling and light hedging against industry support, traders said.
London's benchmark December cocoa finished down 9 pounds at 801 pounds, after trading from 813 to 800 pounds. March closed down 10 pounds at 826 pounds. Continued dry weather in the West African country Ivory Coast, the world's largest cocoa producer, threatens to reduce output from the October-March main crop growing cycle unless rains arrive soon, farmers told Reuters on Monday.