US cocoa futures settled weak on Wednesday, correcting lower on liquidation and technical pressure after on Monday's fund-driven rally, traders said. "(There's) some trade or industry buying mixed with some arbitrage as New York fell faster than London," one trader said, about arbitrage selling that pressured US prices.
In open-outcry dealings, the ICE March cocoa futures contract finished $32 lower at $2,154 per tonne. The rest closed down from $27 to $35. The benchmark ICE March contract trading on the screen was down $26 at $2,160 by 12:57 pm EST (1757 GMT), spanning $2,132 to $2,186.
The rest ranged from $25 to $48 weaker. "There was spec and fund liquidation following yesterday's decline," one cocoa dealer said. The selling triggered sell-stops as low as $2,138 in the March contract, traders said. The New Year brought a boost for most commodities as index funds reallocated money, but the re-balancing period was completed this week.
US cocoa grindings in the fourth quarter of 2007 could range from unchanged to 11 percent lower from the previous year, cocoa dealers and analysts projected ahead of the Chocolate Manufacturers Association of USA (CMA) report due on Thursday at 4:15 pm.
Meanwhile on the London market, cocoa futures trading on Liffe crept lower with the benchmark March contract finishing down 7 pounds at 1,125 pounds per tonne, in dealings from 1,111 to 1,133 pounds. Cocoa exporters in Ivory Coast said on Wednesday they had lowered estimates for production in the October-March main crop season in the world's top grower to just over 1 million tonnes from 1.1 million previously.
Around noon, ICE estimated heavy 3,559 lots moved in the pit compared with the 786 contracts on Tuesday, when 13,634 lots were dealt on the electronic platform. Open interest in ICE cocoa futures rose 2,871 lots to 192,392 contracts as of January 15.