[2007-07-30]  Cocoa steady as market monitors potential higher crops in West Africa
LONDON (Thomson Financial) - Cocoa was steady having traded lower yesterday on predictions of a bigger West Afrian crop but traders kept a close eye on political developments in key producer the Ivory Coast.

Prices remain at higher levels, however, with a tight supply outlook keeping cocoa on the Euronext Liffe just 6 pct off a four year high struck earlier this month.

'Overall, price activity over the past few sessions has been wide ranging but sideways in nature,' said Sucden analyst Stephanie Garner.

'(Cocoa's currently) very much dominated by reactions to news reports or rumours with little in the way of confirmation hence the price re-adjustment that follows the next and following trading sessions,' she added.

At 2.00 pm on the Euronext Liffe, cocoa for September delivery was down at 1,070 stg a tonne against 1,071 stg at the close yesterday.

Cocoa rose earlier this week on news the Ivory Coast army had been put on full alert ahead of the president Laurent Gbagbo's first visit to the rebel held North. The military was alerted because last month, rockets were fired at prime minister Guillaume Soro's plane when he was flying in the same northern region.

However, while this news provided a brief boost to cocoa, political risks in the Ivory Coast had already been priced into the market, causing prices to consolidate.

Prices have since been under pressure by reports of rainfall in West Afria.

'When it rains during the mini-dry season it tends to be good for crops,' said Fortis analyst Jonathan Parkman.

Some traders predict that the improving crop outlook could push prices lower, unless a further supply threat emerges in one of the key west African producers.

In other softs traded on Liffe, Robusta coffee for September delivery was down at 1,826 usd a tonne against 1,836 usd, while No 5 white sugar for October delivery rose to 314.20 usd a tonne against 311.30 usd.



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Source: © 2007 Forbes.com LLC™