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The cocoa market was unable to sustain a move up to new high ground on Friday, as the continued violence in the Ivory Coast appears to have lost some its ability to hold prices at these levels. May cocoa made another fresh, 32-year high on Friday but turned around and fell sharply lower as prices ended the day with heavy losses. Reports that Ivory Coast government workers were being paid a large portion of their pre-crisis wages may have deflated the recent rally, and end-of-week profit-taking after a $375 recovery from Tuesday’s lows may have put further pressure on the market. Over the weekend, the UN announced that it would be sending more troops to the Ivory Coast. In addition, rebel forces have announced that they had seized a second town in the western part of the country. While weekly cocoa port arrivals in the Ivory Coast have been sharply reduced from last year’s levels, the cumulative total is close to 19% above last season’s pace at this time. Cocoa bean exports from the Indonesian island of Sulawesi during February were up more than 12% from last year’s levels, in spite of a higher base price for export tax assessment. The Commitments of Traders reports as of March 1st showed non-commercial traders were net long 31,818 contracts, an increase of 1,271 contracts for the week. Non-commercial and nonreportable traders combined held a net long position of 40,078 contracts, up 1,747 contracts for the week. The buying trend is seen as a short term positive force. Commodity index traders held a net long position of 36,085 contracts, up 1,655 contracts for the week.
TODAY’S GUIDANCE: The escalation of fighting in the Ivory Coast may not only reduce the chances of a possible settlement, it also greatly increases the chances that the current export ban will be extended further into the future. Given the amount of cocoa supplies ready for export, however, any sign of a potential lifting of the ban could send prices sharply lower.
TODAY’S MARKET IDEAS: The sweeping reversal on Friday was a negative technical development, but the market did manage to close slightly higher on the week to avoid a weekly reversal. Outside market forces are positive this morning, but there is still no sign of peace.
Cocoa: Escalating Ivory Coast Violence May Extend Export Ban
by Terry Roggensack on March 7, 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 was unable to sustain a move up to new high ground on Friday, as the continued violence in the Ivory Coast appears to have lost some its ability to hold prices at these levels. May cocoa made another fresh, 32-year high on Friday but turned around and fell sharply lower as prices ended the day with heavy losses. Reports that Ivory Coast government workers were being paid a large portion of their pre-crisis wages may have deflated the recent rally, and end-of-week profit-taking after a $375 recovery from Tuesday’s lows may have put further pressure on the market. Over the weekend, the UN announced that it would be sending more troops to the Ivory Coast. In addition, rebel forces have announced that they had seized a second town in the western part of the country. While weekly cocoa port arrivals in the Ivory Coast have been sharply reduced from last year’s levels, the cumulative total is close to 19% above last season’s pace at this time. Cocoa bean exports from the Indonesian island of Sulawesi during February were up more than 12% from last year’s levels, in spite of a higher base price for export tax assessment. The Commitments of Traders reports as of March 1st showed non-commercial traders were net long 31,818 contracts, an increase of 1,271 contracts for the week. Non-commercial and nonreportable traders combined held a net long position of 40,078 contracts, up 1,747 contracts for the week. The buying trend is seen as a short term positive force. Commodity index traders held a net long position of 36,085 contracts, up 1,655 contracts for the week.
TODAY’S GUIDANCE: The escalation of fighting in the Ivory Coast may not only reduce the chances of a possible settlement, it also greatly increases the chances that the current export ban will be extended further into the future. Given the amount of cocoa supplies ready for export, however, any sign of a potential lifting of the ban could send prices sharply lower.
TODAY’S MARKET IDEAS: The sweeping reversal on Friday was a negative technical development, but the market did manage to close slightly higher on the week to avoid a weekly reversal. Outside market forces are positive this morning, but there is still no sign of peace.
Tags: Cocoa, Softs
About Terry Roggensack