US cocoa futures settled flat on Monday, below a fresh 4-week high on continued May/July spreading while good crop conditions in top grower Ivory Coast provided some pressure and manufacturers bought the dips, traders said.
"The market is being support by spreads at the moment. The market feels stale, industry is nibbling at paper as it is fearful of a run back to the highs," one cocoa trader said. The benchmark ICE July cocoa contract settled steady at $2,560 per tonne, in a trading band from $2,538 to $,2572, a high last seen March 19.
The market trades until 3:15 pm. By 12:56 pm EDT (1656 GMT), the July contract was up $2 at $2,562 per tonne while the rest ranged from $17 lower to $14 higher. Participants continued to roll positions out of the May contract ahead of first notice day April 17, into July.
As of April 11, open interest for the May contract sat at 8,398 lots while July was at 61,933 contracts, exchange data showed. The key contract settled at a 4-week high Friday, with the session's peak up 13 percent from the low hit Monday, April 7. Position rolling out of the May contract into July, and funds and investors buying what was viewed as an oversold market, gave the market a sharp boost last week.
"New York support was arbitrage related," a dealer said. Sterling was strong relative to the dollar, attracting arbitrage buying in the US cocoa market. For weather, abundant rain and hot spells in Ivory Coast's main cocoa growing regions over the past week bode well for the development of the April-September mid crop, farmers and analysts in the world's top grower said.
London cocoa slipped with the July contract closing 15 pounds weaker at 1,422 pounds per tonne, in dealings from 1,413 to 1,440 pounds. In a weekly report released Friday, the US Commodity Futures Trading Commission showed non-commercials held a net long position of 26,945 lots in the week ending April 8, compared to the week-ago figure at 25,336 contracts. For volume on ICE, 16,775 cocoa futures contracts traded Friday while open interest rose 1,152 lots to 134,209 lots, exchange data said.