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The cocoa market remains pointed in an upward direction, as the market received further evidence of potential supply disruptions during the near future. May cocoa was able to maintain a steep upward trajectory yesterday finishing up the session with large gains for the second day in a row and at their highest levels in over 30 years. The major news story of the day was a report that opposition candidate and presumptive election winner Ouattara will extend the current Ivory Coast cocoa export ban for two more weeks, now to conclude on March 10th. While not totally unexpected, the market was strengthened by the news as this may increase the chances that cocoa pods will begin to spoil and reduce what was originally forecast to be a fairly sizable crop. There are indications that official cocoa purchases in Ghana has fallen below last season’s pace on a weekly basis, but the cumulative totals for this season may be as much as 40% ahead of last season’s pace. While the market was already at the highest price level for over a year, the over $150 gain over the past two sessions could leave the market vulnerable to a quick pullback if there is any indication of a settlement between the two sides in the Ivory Coast conflict. Outside market forces also look somewhat negative. Indonesia announced they will be keeping their cocoa export tax steady during February.
TODAY’S GUIDANCE: Major uncertainty is the driving force of the market as the Ivory Coast is not in a position to store such a large harvest and if conditions worsen, more cocoa could be lost due to spoilage. Unless the political situation resolves itself soon, the bullish tone to the market is likely to persist. Given a negative tone from outside markets and the surge higher of the past few sessions, the market could see a short-term correction.
TODAY’S MARKET IDEAS: Resistance for May cocoa comes in at 3587 and 3610 with 3503 and 3452 as close-in support.
Cocoa: Problems in Ivory Coast the Driving Force
by Terry Roggensack on February 23, 2011
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
The cocoa market remains pointed in an upward direction, as the market received further evidence of potential supply disruptions during the near future. May cocoa was able to maintain a steep upward trajectory yesterday finishing up the session with large gains for the second day in a row and at their highest levels in over 30 years. The major news story of the day was a report that opposition candidate and presumptive election winner Ouattara will extend the current Ivory Coast cocoa export ban for two more weeks, now to conclude on March 10th. While not totally unexpected, the market was strengthened by the news as this may increase the chances that cocoa pods will begin to spoil and reduce what was originally forecast to be a fairly sizable crop. There are indications that official cocoa purchases in Ghana has fallen below last season’s pace on a weekly basis, but the cumulative totals for this season may be as much as 40% ahead of last season’s pace. While the market was already at the highest price level for over a year, the over $150 gain over the past two sessions could leave the market vulnerable to a quick pullback if there is any indication of a settlement between the two sides in the Ivory Coast conflict. Outside market forces also look somewhat negative. Indonesia announced they will be keeping their cocoa export tax steady during February.
TODAY’S GUIDANCE: Major uncertainty is the driving force of the market as the Ivory Coast is not in a position to store such a large harvest and if conditions worsen, more cocoa could be lost due to spoilage. Unless the political situation resolves itself soon, the bullish tone to the market is likely to persist. Given a negative tone from outside markets and the surge higher of the past few sessions, the market could see a short-term correction.
TODAY’S MARKET IDEAS: Resistance for May cocoa comes in at 3587 and 3610 with 3503 and 3452 as close-in support.
Tags: Cocoa, Softs
About Terry Roggensack