US cocoa futures closed lower on Tuesday, with pressure from light long-liquidation and continued rain in the West African cocoa belt pushing prices to a one-week low, dealers said. "It looks like we're just getting a little bit of a correction from the move up, from $1,750 to $1,950.
I think the weather is helping to keep the lid on things," one trader said. The second-month contract rose from a low of $1,757 per tonne on May 1 to a high at $1,948 per tonne on May 10, below the near-four-year peak at $2,014 in mid-April.
The New York Board of Trade benchmark July contract dropped $25 to settle at $1,901, ranging from $1,913 to $1,886, a low dating back to May 8. September futures fell $23 to end at $1,922 and, with the exception of one contract, the rest ranged $22 or $23 lower.
Another contributing factor to bearish dealings was the improving political situation in top cocoa grower Ivory Coast, traders said. Five hundred troops from the French peacekeeping force that has kept government and rebel fighters apart in Ivory Coast since a 2002 civil war left for France, a spokesman for the force said on Tuesday.
The July cocoa contract on the IntercontinentalExchange NYBOT electronic platform was $24 lower at $1,902, at 1:05 pm EDT (1705 GMT), while the rest ranged from $21 to $30 lower. Electronic trading ends at 3:15 pm.
Sterling hit a one-month low versus the dollar on Tuesday, after data showed that consumer price inflation in Britain slowed in April, but firmed later in the session. Although a firm pound can attract arbitrage buying and support prices here, the New York market appeared to ignore the currency's gains, one trader said.
Cocoa futures in London also fell, with the Liffe benchmark July cocoa contract finishing down 10 pounds at 1,056 pounds per tonne, with trades ranging from 1,052 to 1,069 pounds. Open-outcry volume was estimated by NYBOT at 5,573 lots, compared with total 6,312 lots on Monday, when 4,262 traded electronically.
Increased rainfall has boosted cocoa purchases in some parts of Ghana, but production continues to suffer the affects of a prolonged drought this year in the world's No 2 producer, buyers said on Tuesday. Meanwhile, farmgate prices in Ivory Coast's cocoa areas rose in the May 7-13 period, Coffee and Cocoa Bourse data showed on Tuesday, as competition remained strong for mid-crop beans that have been slow in coming.