DJ ICE Cocoa Review: Modest Gains After Reaching Resistance
DOW JONES NEWSWIRES


Cocoa futures for September delivery inched higher Monday after an early
rally attempt was thwarted as the contract met chart-based resistance.

Most active September cocoa added $7, or 0.24%, to settle at $2,973 a ton on
ICE Futures U.S. in New York.

Cocoa futures are attempting to rebound from last week's lows as the effect
of the warehouse squeeze in London diminishes. The fact that nearly all of the
exchange stock on London's NYSE Liffe market was delivered to a large
speculative trader instead of a commercial account, or end-user of the
commodity, allowed futures to fall nearly 6% last week. The market is now
attempting to recover from those losses.

The early rally fizzled, however, when speculative buying pushed September to
a session high of $3,007, where it met resistance and follow-through buying
diminished. The session peak coincided with 100-day moving-average resistance,
where selling intensified.

Though prices dipped into negative territory for a time, cocoa futures
managed to close with modest gains as buying was uncovered near the lows.

"There's not a lot of fund activity coming in here to push the market higher.
The market is very quiet," said Sterling Smith, analyst at Country Hedging in
St. Paul, Minn.

While global supplies of cocoa are currently tight, they are deemed adequate
as summer is a time of subdued demand for chocolate. Top grower Ivory Coast has
already harvested its smaller mid-crop and producers won't begin gathering the
much larger main crop until late September or early October.

"Demand at this time of year is spotty and end-users are buying
hand-to-mouth," said Smith.

London cocoa futures fell as the pound strengthened against the dollar.
September cocoa traded on NYSE Euronext's Liffe lost GBP18, or 0.78%, to settle
at GBP2,279 a ton.

Open interest in ICE cocoa fell 74 to total 125,948 lots, the exchange
reported.

Futures volume is pegged at 7,295 lots, with 160 calls and 960 put options
traded.

ICE Change Range
Sep $2,973 up 7 2,945 - 3,007
Dec $2,999 up 6 2,973 - 3,034
*ICE settlements in dollars per metric ton with intraday range.