DJ ICE Cocoa Review: Prices Slide; Trade Is Seasonally Light
NEW YORK (Dow Jones)--Cocoa prices slid Thursday without fresh cues to give
direction to the range-bound market.

Nearby cocoa for September delivery cocoa settled $19, or 0.6%, lower at
$2,916 a metric ton on ICE Futures U.S. The contract slid as low as $2,902
during the session--its lowest price since May 26.

Cocoa is trading within a seasonally light market timeframe that lasts until
near Oct. 1, the onset of the main harvest in West Africa. Demand also
typically picks up at that time, in line with holiday season demand in the U.S.
and Europe.

Cocoa prices have fallen 7% since July 16, when prices leapt higher behind
tight exchange stocks in London. Both ICE and NYSE Liffe prices have since
skidded lower when it was revealed that the buyer wasn't an end user of cocoa.

Prices are likely to idle in the near term, with support for September
futures at $2,900.

"The market is pretty fairly valued there," said Sterling Smith, market
analyst at Country Hedging in St. Paul, Minn. "That support should hold barring
any bizarre outside news."

The International Cocoa Organization estimates world production will fall
nearly 1% short of demand in the 2009-10 season, which ends Sep. 30. The amount
of beans ground by confectioners to make chocolate is anticipated to be 4%
higher than last year at 3.579 million tons, the organization said in late May.

Liffe September cocoa settled GBP13, or 0.6%, at GBP2,273 a ton.

Volume to the point of settlement was estimated 11,819 contracts, according
to exchange data. In options, approximately 664 calls and 238 puts traded on
the floor in that timeframe.

ICE cocoa open interest--the number of active positions left at the end of
the session--increased by 635 positions Wednesday to total 126,562, the
exchange reported.

Close Change Range (To the point of settlement)
Sep $2,916 -$19 $2,902-$2,970
Dec $2,942 -$18 $2,928-$2,991