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While the cocoa market may be reacting to the final stages of the Ivory Coast political crisis, prices are still having some trouble sustaining moves in either direction. May cocoa came under heavy pressure again yesterday and was close to making a fresh downside breakout before a late recovery lifted prices away from the lows. A report that Ivory Coast President Gbagbo was in negotiations to leave the country and to institute a cease-fire was seen as the main negative factor for the cocoa market, as these actions will likely lead to cocoa exports from that country resuming fairly quickly. The EU has already said that they will remove their sanctions against the Ivory Coast once opposition leader Ouattara is in power. Violent confrontations continue, particularly near the main city of Abidjan, but it may have been the discovery of a mass grave in the western part of that nation the bought on international pressure to resolve the crisis. There will certainly be logistical problems moving cocoa supplies from the countryside to the two main port facilities, but there are indications that close to 500,000 tonnes are ready for almost immediate export. Cocoa bean exports from the Indonesian island of Sulawesi during March were close to 40% below last year’s levels, and which provided some mild support for the market during the session yesterday.
TODAY’S GUIDANCE: Although May cocoa has been relatively quiet so far this morning, the chances for a sharp down-move when official word of Gbagbo’s exit is received are still relatively high. However, any signs of a delay in the power turnover could result in a short-covering rally.
TODAY’S MARKET IDEAS: The market remains in a steep downtrend and is vulnerable to corrective bounces, but the trend looks to remain down and supply issues are significant. July cocoa resistance is at 3073 and 3107, with 2874 and 2746 as the next objectives. High open interest suggests that volatility could stay high for now. Consider buying puts on corrective bounces.
Cocoa: In a Steep Downtrend and Looks To Remain That Way
by Terry Roggensack on April 6, 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!
While the cocoa market may be reacting to the final stages of the Ivory Coast political crisis, prices are still having some trouble sustaining moves in either direction. May cocoa came under heavy pressure again yesterday and was close to making a fresh downside breakout before a late recovery lifted prices away from the lows. A report that Ivory Coast President Gbagbo was in negotiations to leave the country and to institute a cease-fire was seen as the main negative factor for the cocoa market, as these actions will likely lead to cocoa exports from that country resuming fairly quickly. The EU has already said that they will remove their sanctions against the Ivory Coast once opposition leader Ouattara is in power. Violent confrontations continue, particularly near the main city of Abidjan, but it may have been the discovery of a mass grave in the western part of that nation the bought on international pressure to resolve the crisis. There will certainly be logistical problems moving cocoa supplies from the countryside to the two main port facilities, but there are indications that close to 500,000 tonnes are ready for almost immediate export. Cocoa bean exports from the Indonesian island of Sulawesi during March were close to 40% below last year’s levels, and which provided some mild support for the market during the session yesterday.
TODAY’S GUIDANCE: Although May cocoa has been relatively quiet so far this morning, the chances for a sharp down-move when official word of Gbagbo’s exit is received are still relatively high. However, any signs of a delay in the power turnover could result in a short-covering rally.
TODAY’S MARKET IDEAS: The market remains in a steep downtrend and is vulnerable to corrective bounces, but the trend looks to remain down and supply issues are significant. July cocoa resistance is at 3073 and 3107, with 2874 and 2746 as the next objectives. High open interest suggests that volatility could stay high for now. Consider buying puts on corrective bounces.
Tags: Cocoa, Softs
About Terry Roggensack