DJ ICE Cocoa Review: Rises As Commodities Climb On Weak Dollar
NEW YORK (Dow Jones)--Cocoa futures climbed Friday as speculative traders
bought amid general commodities strength and the weaker dollar.

Nearby cocoa for September delivery cocoa settled $45, or 1.5%, higher at
$3,091 a metric ton on ICE Futures U.S.

Cocoa prices have been gravitating between $2,900 and $3,200 throughout the
summer, when trade is seasonally light. World cocoa bean production eases at
that time and demand backs off. Trade tends to pick up in September and October
when the main crop in West Africa picks up. At the same time, confectioners and
food manufacturers begin to stock up ahead of the holiday season.

Cocoa has been following commodities prices higher this week as the
relatively soft U.S. dollar invites commodities investment. Bearish domestic
economic data throughout the week sent traders out of the dollar on concern the
U.S. economy was stalling on the track to recovery. A softer dollar makes
futures contracts less expensive in other currencies. As cocoa prices settled
Friday, metals and most agricultural commodities were stronger.

Prices are likely to drift in range as outside market cues and technical
charts influence prices.

"I would look for continued range-bound trade from $2,950 to $3,150," said
Sterling Smith, market analyst at Country Hedging in St. Paul, Minn.

Traders are on the lookout for the fundamental setup of the upcoming cocoa
season, which begins Oct. 1.

The International Cocoa Organization estimates world production will fall
nearly 1% short of demand in the current 2009-10 season, which ends Sept. 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. Demand for beans has rebounded from recession lows in tandem with the
world economy.

"There is a reasonable prospect of the global cocoa market shifting back to a
surplus in the forthcoming 2010-2011 season - but only a relatively moderate
surplus at best," ABN Amro Group and VM Group said in a joint quarterly cocoa
report released Friday. "In our view, cocoa demand tends to closely track
broader economic growth. There is little in this scenario to encourage the view
that we are likely to see any massive upsurge in cocoa grindings next year."

Volume was estimated at 9,468 contracts to the point of settlement, according
to exchange data. In options, approximately 54 calls and 74 puts traded on the
floor.

ICE cocoa open interest--the number of active positions left at the end of
the session--decreased by 988 positions Thursday to total 124,420, the exchange
reported.

Close Change Range (To the point of settlement) Liffe Close
Change
Sep $3,091 +$45 $3,028-$3,095
GBP2,273 -GBP13
Dec $3,119 +$48 $3,054-$3,123
GBP2,185 -GBP12