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March cocoa continues to build on this month’s sharp rally, with prices rising more than 22% during the past three weeks. In addition to ongoing concern with this season’s cocoa crop in the Ivory Coast, a report that Indonesian cocoa production may decline 10% to 15% from last season’s already below-average levels provided further support for the market as that nation has been a traditional supplier to the US market. Many analysts are forecasting double-digit declines for cocoa production in the Ivory Coast and Ghana this season, due in large part to excessive dry weather over the past few months. The improvement in broad-market sentiment has also helped to underpin cocoa prices at these high levels, although any sort of Euro zone risk flare-up or weak US economic data could erode this support in a hurry. In addition, concerns over global demand have been elevated due to sluggish fourth quarter cocoa grinding data from Europe and North America.
TODAY’S GUIDANCE: With prices rising over $200 during the past four sessions, end-of-week profit-taking could dampen upside momentum later on in the session. The upcoming Commitment of Traders data will reflect any substantial reduction of the non-Commercial net short position during this week’s rally, as fund short-covering has been a major component of this year’s huge rally.
TODAY’S MARKET IDEAS: While this week’s upside breakout to fresh two-month highs should have plenty of technically-based support, prices could be vulnerable to a sharp pullback if outside markets fail to maintain their positive tone.
Energy: Early Morning Bias Favors the Bear Camp, but Losses Appear Limited
Metals: Gold Might be Facing Adverse Currency Action Choppy Global Equities
Currencies: Heading Into the Weekend On a Positive Will Help Canadian
Interest Rates: Markets watching Philly Fed Speech & EU News
Cocoa: Breakout Has Technical Support; Vulnerable to Outside Markets
by Dave Hightower on January 27, 2012
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!
March cocoa continues to build on this month’s sharp rally, with prices rising more than 22% during the past three weeks. In addition to ongoing concern with this season’s cocoa crop in the Ivory Coast, a report that Indonesian cocoa production may decline 10% to 15% from last season’s already below-average levels provided further support for the market as that nation has been a traditional supplier to the US market. Many analysts are forecasting double-digit declines for cocoa production in the Ivory Coast and Ghana this season, due in large part to excessive dry weather over the past few months. The improvement in broad-market sentiment has also helped to underpin cocoa prices at these high levels, although any sort of Euro zone risk flare-up or weak US economic data could erode this support in a hurry. In addition, concerns over global demand have been elevated due to sluggish fourth quarter cocoa grinding data from Europe and North America.
TODAY’S GUIDANCE: With prices rising over $200 during the past four sessions, end-of-week profit-taking could dampen upside momentum later on in the session. The upcoming Commitment of Traders data will reflect any substantial reduction of the non-Commercial net short position during this week’s rally, as fund short-covering has been a major component of this year’s huge rally.
TODAY’S MARKET IDEAS: While this week’s upside breakout to fresh two-month highs should have plenty of technically-based support, prices could be vulnerable to a sharp pullback if outside markets fail to maintain their positive tone.
Tags: Cocoa, Softs
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