London NYSE Liffe saw no evidence of abusive trading behaviour on the July cocoa contract that expired last week with the physical delivery of almost all London's cocoa stocks, it said in a letter to a group complaining of excessive speculation in cocoa futures.

"From our investigations there is no evidence of abusive behaviour or that any market participant is trading with the specific purpose of distorting the price of the July 2010 delivery month," said the letter from the exchange, dated July 8.

16 European cocoa industry participants had complained to the exchange saying the extent of speculation in London cocoa futures could drive them towards using the rival U.S.-based Intercontinental Exchange and urging more transparency in London cocoa futures. In their July 8 letter to the group,  Liffe said it is in "engagement with open position holders about their intentions, to ensure that business is conducted in an orderly manner."

Last week's 240,100 tonne cocoa delivery from the July cocoa contract was the largest in nearly 14 years and represented almost all the physical stocks registered with the Liffe exchange, fuelling fears of a supply crunch for the September contract. British commodities firm Armajaro was reported by UK newspapers to be the main receiver of the 240,100 tonnes of cocoa. Armajaro declined to comment.

European trade and industry sources told Reuters on Monday that Switzerland's Barry Callebaut, the world's largest chocolate maker, was the end user of about 100,000 tonnes of cocoa that will be delivered on the July contract.

Dealers said the more heavily regulated New York Intercontinental Exchange would require evidence of off-take sales contracts from anyone wishing to take a large delivery of cocoa like the one on the London market last week.