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March cocoa settled higher yesterday but within the previous day’s range as the market continues to consolidate following a steep drop from 30 year highs reached earlier in the month. With low market participation ahead of year end, the trade likely lacks the incentive to push March cocoa outside the recent range between $3,300 and $3,220. While there has been some industry news including forecasts of higher Indonesian production and good weather improving the development of the Ivory Coast cocoa crop that would seem to dent the bull case, it doesn’t appear that market sentiment has completely shifted away from the bull camp, even though a lot of weak handed longs were shaken from the market on the sharp technical break seen this month. There still seems to be a general view that Ivory Coast harvest supply flows will begin to trail off in the New Year. And in fact, the pace of cocoa bean deliveries to ports which started the season at 93% above year ago has fallen to an estimate of only 13% above year ago as of December 27th. With March cocoa falling by as much as $287 from the December high, seeing any clear evidence that Ivory Coast supplies are starting to tighten could quickly shift control back to the bull camp.
TODAY’S GUIDANCE: Some of the strength in March cocoa yesterday may have been currency related given the strength in the Pound. But with trading conditions thin and a lack of industry news available, the market is easily being pushed around. With the Dollar trading weaker overnight, the currency action could provide some price support to cocoa this session. The price action in March cocoa still looks as if the market is attempting to form a bottom. But so far the market lacks upside traction and may remain in a holing pattern until more traders return to the market in the New Year. Critical overhead resistance comes in at the 40 day moving average at $3,288 today.
TODAY’S MARKET IDEAS: With the cocoa market likely lacking a fresh fundamental incentive to trade higher but with selling interest also likely limited by the market’s oversold technical condition, a sideways trade in March cocoa between $3,288 and $3,220 seems possible on the last trading day of the year.
Cocoa Market Commentary – 2009.12.31
by Terry Roggensack on December 31, 2009
Below is a sample of our 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 settled higher yesterday but within the previous day’s range as the market continues to consolidate following a steep drop from 30 year highs reached earlier in the month. With low market participation ahead of year end, the trade likely lacks the incentive to push March cocoa outside the recent range between $3,300 and $3,220. While there has been some industry news including forecasts of higher Indonesian production and good weather improving the development of the Ivory Coast cocoa crop that would seem to dent the bull case, it doesn’t appear that market sentiment has completely shifted away from the bull camp, even though a lot of weak handed longs were shaken from the market on the sharp technical break seen this month. There still seems to be a general view that Ivory Coast harvest supply flows will begin to trail off in the New Year. And in fact, the pace of cocoa bean deliveries to ports which started the season at 93% above year ago has fallen to an estimate of only 13% above year ago as of December 27th. With March cocoa falling by as much as $287 from the December high, seeing any clear evidence that Ivory Coast supplies are starting to tighten could quickly shift control back to the bull camp.
TODAY’S GUIDANCE: Some of the strength in March cocoa yesterday may have been currency related given the strength in the Pound. But with trading conditions thin and a lack of industry news available, the market is easily being pushed around. With the Dollar trading weaker overnight, the currency action could provide some price support to cocoa this session. The price action in March cocoa still looks as if the market is attempting to form a bottom. But so far the market lacks upside traction and may remain in a holing pattern until more traders return to the market in the New Year. Critical overhead resistance comes in at the 40 day moving average at $3,288 today.
TODAY’S MARKET IDEAS: With the cocoa market likely lacking a fresh fundamental incentive to trade higher but with selling interest also likely limited by the market’s oversold technical condition, a sideways trade in March cocoa between $3,288 and $3,220 seems possible on the last trading day of the year.
Tags: Cocoa, Softs
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