Cocoa futures trading on ICE Futures US settled more than 5 percent higher at a 28-year high on Thursday, on heavy technical support, a strong sterling relative to the dollar and speculative interest, traders said.
"It's speculative and technical. New highs over $2,845 shows a continuation of the uptrend, and those that took profits last week are jumping right back in," one cocoa dealer said, referring to the May contract. The key ICE May cocoa contract settled $149 higher, or 5.4 percent, at $2,922 per tonne, the loftiest close since April 1980 for the second position on a monthly continuation chart. Prices moved in an exceptionally wide range from $2,797 to $2,944.
The market trades until 3:15 pm By 12:56 pm EDT (1656 GMT), the May contract was up $139 at $2,912 per tonne. Strong sterling relative to the dollar can attract arbitrage buying on the US cocoa market. Fund buying was noted earlier in the session. The weak dollar boosted many commodities to record highs, including crude and gold. The Reuters-Jefferies CRB Index, which tracks prices of 19 commodity futures including cocoa, also hit a record high.
The money following commodity indexes is estimated to have grown by about $30 billion this year, reaching around $185 billion at end of February, as both prices and investor interest in the sector reached new highs, a commodity index manager said on Thursday.
The second-month cocoa contract has climbed about 40 percent since early January. A strike over pay by dock workers at ports in Ivory Coast went into its fourth day on Thursday, halting the loading of export shipments from the world's top cocoa producer, shippers and exporters said. For volume on ICE, a total of 11,112 cocoa contracts traded Wednesday, while open interest inched up 210 lots to 174,408 lots, exchange data said.