US cocoa futures jumped to close up 3 percent Friday, following the London market higher on chart-based buying in relatively light dealings, while the market ignored harvest pressure and the weak pound, dealer said. The benchmark March cocoa contract soared $102, or 3.2 percent, to close at $3,299 per tonne. Wide trading range from $3,175 to $3,319 per tonne.
Volume for March at 8,493 lots at 12:26 pm EST (1726 GMT). Options-related dealings in London cocoa, ahead of December options expiry next week, drove the US cocoa futures higher - traders. "With the rally up today, people who have sold the calls basically have to cover the delta." - Marcelo Dorea, partner of hedge fund Round Earth Capital in New York.
The delta is the difference between an option price and the underlying futures contract. The jump attracted chart-based buying to US cocoa futures, although volume was relatively light - traders. The market climbed while most commodities dropped on pressure from the firm dollar.
The ICE Futures Exchange cancelled trades on the US dollar index futures above 76.50 - spokesperson. News that ICE was probing US dollar index trades, ahead of its announcement to cancel some trades, may have attributed to thin dealings in cocoa - Michael Maniatis, market strategist with LaSalle Futures Group in Chicago.
"When news of this arises, sometimes you can see market participants stand on the sidelines in other exchange products like cocoa until they hear how it shakes out. You could have locals running prices." - Maniatis. Total volume Thursday a light 6,120 lots, down from the previous 11,413 lots - ICE. Total open interest by November 19 was 122,116 lots, little changed from the previous 122,366 lots - ICE.