US cocoa futures finished at a five-year high on Monday, buoyed by speculative buying and a firm sterling with further gains capped by profit taking, dealers said.
"Today currency helped out. There's a seller in this market on the nines, so $2,319, $2,329,$2,339, they sell about 500 lots per clip," one cocoa trader said, noting the systematic sales appear to be a hedge funds taking profits.
The contract has touched five-year highs for four straight sessions. On the floor, the ICE March cocoa futures contract settled up $20 at $2,346 per tonne, the loftiest close for the spot month since February 2003. The rest closed $21 to $35 higher.
On the electronic platform, the ICE March contract was up $18 at $2,344 by 12:59 pm EST (1759 GMT), in dealings from $2,316 to $2,349. One contract aside, the rest were up from $1 to $29. Except for one contract, they all hit contract highs.
"There's just no bearish information around. Industry is short and they're just not biting the bullet to buy more cover. They just pick off the lows and the market goes higher," one trader said.
The pound strengthened relative to the dollar, something that can attract arbitrage buying here. Heavy position rolling out of the March contract into May sharply boosted volume, with traders estimating spread volume at 6,800 by 12:15 pm.
Dry weather in top producer Ivory Coast was seen providing underlying support. Ivory Coast's main cocoa growing zones have had a further week without rain, farmers said on Monday, making it more than one month since showers last fell in some of the most important farming areas.
Also in the country, staff at the Coffee and Cocoa Bourse (BCC) went on strike for a second working day on Monday to protest the return of the body's sacked director, a union official said.
In London, cocoa futures rose to another 4-1/2-year high on speculative buying and signs of increased industry demand. Liffe's March cocoa settled 4 pounds higher at 1,209 pounds, moving from 1,198 and 1,212 pounds. Around noon, ICE estimated 476 lots traded in the pit, compared to the 1,679 contracts that traded on the floor Friday when a 20,499 lots traded in open-outcry. Open interest in ICE cocoa futures slipped 388 lots at 192,167 contracts as of February 1.