US cocoa futures closed up 2.8 percent on Tuesday after soaring to a near four-year peak as a stronger pound spurred arbitrage buying, traders said. "The strength in the market today was seen because of that British pound, it just pushed to a new high today," one dealer said after sterling vaulted $2 Tuesday for the first time in nearly 15 years.
The lack of aggressive buying by funds and speculators, which hold a large net long position, prevented second-month July from surpassing its recent peak and hitting fresh four-year high, traders said.
In the open-outcry pit, New York Board of Trade May cocoa soared $53 to finish at $1,956 per tonne, in wide dealings from $1,910 to $1,965. Benchmark July surged $54 or 2.8 percent to end at $1,989 after dealing from $1,950 and $1,998 which was on par with the near four-year peak scaled on March 30.
The rest rose $51 to $54. July was up $50 at $1,985 on the IntercontinenalExchange NYBOT electronic platform at 12:58 pm EDT (1658 GMT). Electronic trading ends at 3:15 pm.
"The market could top out here if we see some weakness in the British pound on Wednesday," one broker said, adding continued strength in sterling could cause the rally to continue. On Wednesday, the cocoa futures market has the potential to see a washout similar to the sharply lower trade on April 2 that followed the recent rise to a near four-year peak when the second-month contract closed $119 below the previous day's settlement price, the broker said.
NYBOT estimated pit volume around noon at 3,958 lots, compared to the 19,064 lots officially tallied on Monday when 11,943 of these traded electronically. Cocoa futures in London settled firmer, with Liffe May up 15 pounds at 1,040 pounds a tonne in dealings from 1,024 to 1,045 pounds.
Meanwhile, Farmgate cocoa prices in top producer Ivory Coast's main growing areas were mixed in the week of April 9-15, Coffee and Cocoa Bourse (BCC) data showed on Tuesday, with competition fierce to pick up the first beans of the mid-crop.