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The market pushed lower overnight, as a lack of new buying interest helped pressure prices. The cocoa market has rebounded away from the recent lows but it has been unable to the move because the uncertain situation in the Ivory Coast has kept traders on edge. May cocoa failed to hold onto early gains yesterday and fell back into negative territory by the close. There were few fresh reports from the Ivory Coast, although the President of Nigeria urged the UN to take more decisive action towards resolving the conflict. Reports indicate that the Brazilian state of Bahia produced their largest main cocoa crop since the 1996-97 season. With larger crops widely expected from the West African production area, any indication that the Ivory Coast export ban will end could put cocoa prices under heavy pressure. The large sell-off in the British Pound also puts pressure on cocoa, as it encourages arbitrage selling against the LIFFE cocoa contract.
TODAY’S GUIDANCE: May cocoa has been unable to put together a recovery during the last few weeks, even with most news headlines in this market focusing on an uncertain situation in the Ivory Coast. There may be some acceptance within the market that the supply disruption from this situation may be close to a conclusion.
TODAY’S MARKET IDEAS: After a three-day recovery bounce, the market looks vulnerable to resuming the downtrend. Bulls are waiting for supply disruptions from the Ivory Coast, but there seems to be plenty of cocoa moving. May cocoa resistance comes in at 3255 and 3315. Keep 2996 as next downside target.
Cocoa: After 3 Day Bounce Vulnerable to Downside. Bulls Need Supply Problems
by Terry Roggensack on March 24, 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 market pushed lower overnight, as a lack of new buying interest helped pressure prices. The cocoa market has rebounded away from the recent lows but it has been unable to the move because the uncertain situation in the Ivory Coast has kept traders on edge. May cocoa failed to hold onto early gains yesterday and fell back into negative territory by the close. There were few fresh reports from the Ivory Coast, although the President of Nigeria urged the UN to take more decisive action towards resolving the conflict. Reports indicate that the Brazilian state of Bahia produced their largest main cocoa crop since the 1996-97 season. With larger crops widely expected from the West African production area, any indication that the Ivory Coast export ban will end could put cocoa prices under heavy pressure. The large sell-off in the British Pound also puts pressure on cocoa, as it encourages arbitrage selling against the LIFFE cocoa contract.
TODAY’S GUIDANCE: May cocoa has been unable to put together a recovery during the last few weeks, even with most news headlines in this market focusing on an uncertain situation in the Ivory Coast. There may be some acceptance within the market that the supply disruption from this situation may be close to a conclusion.
TODAY’S MARKET IDEAS: After a three-day recovery bounce, the market looks vulnerable to resuming the downtrend. Bulls are waiting for supply disruptions from the Ivory Coast, but there seems to be plenty of cocoa moving. May cocoa resistance comes in at 3255 and 3315. Keep 2996 as next downside target.
Tags: Cocoa, Softs
About Terry Roggensack