Cocoa Futures Ease as Market Hits Technical Resistance

Neena Rai

 LONDON - Cocoa futures eased in early European trading Friday as the market

failed to breach key technical resistance levels, traders and analysts said.

  "London cocoa prices continue to test resistance at GBP1,694 a metric ton

with the most recent sessions unable to breach this level," Kash Kamal,

research analyst at Sucden Financial said.

  Dry weather concerns in West Africa coupled with higher-than-expected demand

for the chocolate making ingredient drove futures to a one year high Tuesday of

GBP1,729 a ton. Friday, March Liffe cocoa futures slipped 0.3% to GBP1,680 a

ton.

  "The probability of the market going higher is more than it moving lower in

the medium-term," a trader said. "Let's not forget that industry are also short

of cover right now."

  European wheat futures for November delivery traded flat, with gains capped

by the recent strength of the euro against the dollar. A stronger euro against

the dollar against the dollar hampers the competitiveness of European exports

abroad.

  Eastern European Union countries are likely to increase exports by up to 12

million tons between 2012-13 and 2020-21, Rabobank said in a note, offering

possibilities for the nearby net-importing Mediterranean region, some western

EU countries and for Far East Asia.

  "The southern EU as well as the Middle East and North Africa are steady

net-importers of corn and wheat from Europe and the Americas," the bank said.

"In addition, the MENA region's fast-growing population and GDP per capita will

continue to drive imports higher in the next decades."

  November robusta coffee futures for November delivery traded down 0.7%, at

$1,675 a ton, weighed down by expectations of a bumper crop out of top producer

Vietnam and weakness in New York's arabica market.

  Elsewhere, December sugar futures traded 0.2% lower at $486.70 a ton as ample

supplies of the sweetener continue to cap gains.