May 9 - The current review of the cocoa market situation reports on price movements on the international markets during the month of March 2008. Chart I illustrates price movements on the London (LIFFE) and New York (ICE Futures U.S.) markets in March. Chart II shows the evolution of the ICCO daily prices denominated in U.S. dollars and SDRs for the period from January to March 2008. Chart III depicts the link between New York futures prices and the exchange rate of the U.S. dollar against the Pound Sterling in March. Chart IV illustrates the arbitrage spread between the New York and London futures markets. Finally, Chart V shows the recent development in the monthly average of the ICCO daily prices volatility.
Price movements
In March, the ICCO daily price averaged US$2,670 per tonne, up by US$147 compared to the average price recorded in the previous month (US$2,523) and ranged between US$2,396 and US$2,945. After a short-lived correction at the beginning of March, the price rally initiated at the beginning of the current year resumed, with prices reaching new record levels in the middle of the month, at £1,497 per tonne in London, their highest level for five years, while in New York, prices surged to US$2,987 per tonne, their highest level for 28 years.
However, at such high prices and without any substantial fresh bullish market fundamentals, the market became vulnerable to profit-taking. Cocoa futures markets witnessed a strong correction in the third week of the month, reducing the price in London and New York by 15% and 20% respectively in four trading sessions.
