DJ ICE Cocoa Review: Rises; Funds Buy Commodities As Dollar Drops
By Holly Henschen
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--Cocoa prices rose Thursday as commodities rallied when
doubts about the resilience of the U.S. economy sent the dollar spiraling.

Nearby cocoa for September delivery settled $36, or 1%, higher at $3,046 a
metric ton on ICE Futures U.S.

Cocoa prices are in a seasonal holding pattern that corresponds with weaker
demand and lagging supply during the summer months. September futures have
respected a range of roughly $2,900 to $3,200 since June 1. Cocoa trading tends
to be light in the summer, but picks up in September and October, when supplies
from West Africa flow through marketing channels to the confectioners and food
manufacturers that are stocking up before the holidays.

Commodities prices leapt Thursday as the dollar skidded on concerns that a
U.S. economic recovery has slowed. Weekly jobless claims for two weeks ago were
revised higher, showing little improvement in the job market. The safe-haven
dollar slid as confidence waned. This made commodities contracts less expensive
in other currencies when the U.S. dollar is weak. These investments are
attractive to speculators, such as banks and hedge funds.

Outside influences nudged cocoa prices higher within its seasonal sideways
trend.

"It's really just riding the macro picture," said a New Jersey-based cocoa
broker and analyst. "New York [cocoa] is attracting speculative buying, but
it's not finding the sort of fundamental strength that the other markets are
seeing at the moment. This is a rally to sell."

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.

Volume was estimated at 9,838 lots in the session to the point of settlement,
exchange data show. In options, approximately 688 calls and 541 puts traded on
the floor in the same time frame.

ICE cocoa open interest--the number of active positions left at the end of
the session--increased by 23 positions Wednesday to total 125,408, the exchange
reported.

ICE Close Change Range (To the point of settlement) Liffe Close
Change
Sep $3,046 +$36 $2,302-$2,341 Sep
GBP2,286 +GBP15
Dec $3,071 +$37 $2,321-$2,360 Dec
GBP2,197 +GBP25


-By Holly Henschen, Dow Jones Newswires; 212-416-2138;