"It's really been fund selling all day," one trader said, citing recent wet weather in West Africa and on Monday's $1,700 technical break as triggers for the sell-off. The most-active December cocoa contract settled on the New York Board of Trade at $1,668 a tonne, down $35, or about 2 percent, after trading in a range of $1,651 to $1,708. Spot September shed $21 to $1,658 after moving within a $1,645 to $1,670 trading range. Longer dated contracts ended $33 to $34 lower from Tuesday. As harvesting in top-grower Ivory Coast approaches next month, traders said weather forecasts in the region would have more influence on market movements.
On Wednesday, weather service Meteorlogix forecast scattered showers and thunderstorms for West Africa's cocoa region during the next two days. The latest wet-weather forecast continues the pattern of at least the past week.
Cocoa growers in Ivory Coast welcome fresh rainfall and Ghana following a dry spell in July, which had spawned a rally in future, price. Reuters in Abidjan reported after the market closed on Wednesday that Ivory Coast farmers are threatening to disrupt main crop cocoa bean supply unless the government reforms a price support fund which they say has been mismanaged and left them out of pocket.
The farmers said the Regulatory and Control Fund (FRC), which is supposed to prop up their income when farmgate prices drop below a certain level, has not compensated them for low cocoa prices this year.
On NYBOT, estimated cocoa futures volume reached 4,720 lots, compared with Tuesday's 7,103 lots. Open interest in the cocoa market slipped 892 lots to 108,533 lots as of August 24. A trader put technical support for December delivery at $1,650 and resistance at $1,700-$1,705.