NEW YORK/LONDON, April 6, 2011 - Cocoa futures ended firmer on Wednesday, recouping recent losses as the prolonged conflict between presidential rivals in top grower Ivory Coast failed to be resolved as quickly as hoped.
Tuesday's optimism for a near-term resumption of cocoa exports dimmed as forces loyal to presidential claimant Alassane Ouattara launched a heavy attack on the bunker where Laurent Gbagbo was defying efforts to force him to cede power.
ICE July cocoa gained $21 to finish at $3,014 a tonne in above-average volume, with position rolling out of the spot contract boosting activity ahead of its first notice day April 15.
Liffe July cocoa rose 10 pounds to close at 1,921 pounds a tonne.
"It's a combination of profit-taking and a short-covering rally and Gbagbo still has not formally accepted surrender terms imposed by Ouattara and the U.N.," said a veteran cocoa dealer in New York.
A slower return to normal business than the market had expected in Ivory Coast and a weaker U.S. dollar also helped lift prices, he said.
Negotiations led by the United Nations and France aimed at securing the departure of Gbagbo have failed, French Foreign Minister Alain Juppe said, although the conflict was believed to be near a conclusion by many within the cocoa industry.
The market has stabilized after the July contract fell to $2,940 on Friday, the lowest level for the second month since mid-January, and remains about 20 percent below a 32-year peak set in early March at $3,775 per tonne.
Prices rose early last month as the conflict and related European Union sanctions kept exports from Ivory Coast at a virtual standstill, leaving an estimated 450,000 tonnes sitting in warehouses in the world's top grower.
Jonathan Parkman, joint head of agriculture at Marex Financial, told Reuters Insider on Wednesday 100,000-150,000 tonnes of the cocoa was unhedged and this could have a bigger impact on prices than the resumption of shipments.
Commodity traders routinely use futures to hedge their risk when holding physical cocoa. Increased hedging is likely to weigh on futures prices.
"Most of the reports say the damage has not been too bad,"
Parkman said, referring to the roughly 450,000 tonnes believed to be in warehouses. "It will be usable."
Source : reuters
