NEW YORK/LONDON, March 30, 2011 - U.S. cocoa futures fell to a 2-1/2 month low as investors waited increased prospects for a resolution to the power struggle in Ivory Coast, which could free up exports from the world's top cocoa grower.
Volume in U.S. cocoa futures was double the 30-day norm. Players decreased their long position as Alassane Ouattara seems to be gaining the upperhand over incumbent Laurent Gbagbo. New York's May cocoa futures slid $70 to close at $2,987 per tonne. In the last two days trading, the contract has lost 8 percent and settled at its lowest level since Jan. 13.
Ivorian forces loyal to Ouattara are now in control of the town of Soubre, the last main town on the road to the cocoa port of San Pedro, residents said.
If Ouattara's forces take control of the San Pedro port, it could allow cocoa to once again flow out of the country after an export ban stalled supplies.
"The political situation appears close to reaching a change in Ivory Coast," added Sterling Smith, senior analyst with brokerage Country Hedging Inc in St. Paul, Minnesota.
The trade is now mulling whether Ivorian supplies will be shipped out or whether there will be any further logistical or quality problems that may crop up, he said.
Ouattara's export ban, EU sanctions and the collapse of the local banking system have meant over 450,000 tonnes of stocks are languishing in storage, and concerns about a deterioration in quality are growing by the day.
"The sell off is speculator based. They were the ones that ran the prices up," Flury said.
The market's technical outlook had remained shaky after the May contract fell below the 100-day moving average at $3,150 and the 200-day MA at $3,042 on Tuesday. ******
