"It was just more follow-through to the downside from late last week. Last week we saw a lot of fund short-covering at the end of the month and there is really no reason for this market to rally as cocoa beans are still flowing in from Ivory Coast and that is what really capped this market on the upside," said one broker.
Cocoa bean exports in Ivory Coast, which produces some 40 percent of the world's supply, totalled 352,210 tonnes for the first three months of the 2004/05 season (October-December), a shade higher than the 350,903 tonnes recorded in the same period of 2003.
Some 239,541 tonnes of beans were exported in December, up 19 percent from December 2003. A global cocoa deficit of 144,000 tonnes is expected for the 2004/05 season, according to a Reuters poll of analysts and traders last week.
NYBOT rollover from the most-active March contract into May was beginning to heat up, with first notice day for March delivery two weeks away. Open interest in March cocoa fell 57 lots to 30,658 lots, while interest in May was up 73 to 17,297.
On the fundamental front, the UN Security Council on Monday delayed for a second time, until on Tuesday, a scheduled vote on a resolution tightening a United Nations arms embargo on Ivory Coast to help prevent a new outbreak of civil war.
The resolution, drafted by France, would authorise French and UN peacekeepers in Ivory Coast to enforce the arms ban by inspecting cargo shipments, without advance notice, at any port, airfield, military base or border crossing.
It would also call on government and rebel forces to help the UN compile a list of all arms in the country, with an eye to eventual disarmament. Technicians pegged support for March cocoa at $1,520 a tonne, and then $1,500, while resistance was seen at $1,596.
Estimated final cocoa volume reached 12,583 contracts, versus on Friday's official count of 7,004 contracts.