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With a turn for the worse in outside markets and increasing European demand concerns, cocoa appears poised for a resumption of the downtrend. July cocoa was able to bounce back from early weakness yesterday and rally to reach its highest price level since May 13th. A recovery in the British Pound helped to support the market, and prices were able to overcome the negative sentiment of a stronger Dollar on physical commodities. The sharp break in the British pound overnight looks to be a significant negative force for the market to deal with today. Beneficial rains in the Ivory Coast may have gone some way to improving this season’s production totals and some traders are hopeful that mid-crop production will pick up in the months just ahead. However, port arrivals there are still running over 3% behind last season’s pace. Arrivals through May 16th have reached 945,378 tonnes which is down from 982,154 tonnes the previous year. The market is in the process of recovery from the oversold condition of mid-May and there seems to be enough demand concerns out of Europe to cause increased long liquidation selling over the short-term. The COT reports as of May 18th showed fund traders (Non-Commercial) were net long 25,126 contracts, a decrease of 7,562 contracts for the week and the long liquidation trend from speculators is seen as a short-term negative force. ICE warehouse stocks were down 12,670 bags to 4.515 million bags.
TODAY’S GUIDANCE: Trend-following fund traders (hedge funds) reduced their net long position by a whopping 6,837 contracts for the week ending May 18th and held a net long of 14,134 contracts on that date. The long liquidation selling trend is bearish and suggests that if outside markets stay weak, cocoa seems to be a good candidate to see more selling pressures ahead. Resistance for September Cocoa comes in at $2973 with $2866 and $2849 as support. Keep $2623 as a longer-term downside target.
Cocoa Market Commentary – 2010.05.25
by Terry Roggensack on May 25, 2010
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!
With a turn for the worse in outside markets and increasing European demand concerns, cocoa appears poised for a resumption of the downtrend. July cocoa was able to bounce back from early weakness yesterday and rally to reach its highest price level since May 13th. A recovery in the British Pound helped to support the market, and prices were able to overcome the negative sentiment of a stronger Dollar on physical commodities. The sharp break in the British pound overnight looks to be a significant negative force for the market to deal with today. Beneficial rains in the Ivory Coast may have gone some way to improving this season’s production totals and some traders are hopeful that mid-crop production will pick up in the months just ahead. However, port arrivals there are still running over 3% behind last season’s pace. Arrivals through May 16th have reached 945,378 tonnes which is down from 982,154 tonnes the previous year. The market is in the process of recovery from the oversold condition of mid-May and there seems to be enough demand concerns out of Europe to cause increased long liquidation selling over the short-term. The COT reports as of May 18th showed fund traders (Non-Commercial) were net long 25,126 contracts, a decrease of 7,562 contracts for the week and the long liquidation trend from speculators is seen as a short-term negative force. ICE warehouse stocks were down 12,670 bags to 4.515 million bags.
TODAY’S GUIDANCE: Trend-following fund traders (hedge funds) reduced their net long position by a whopping 6,837 contracts for the week ending May 18th and held a net long of 14,134 contracts on that date. The long liquidation selling trend is bearish and suggests that if outside markets stay weak, cocoa seems to be a good candidate to see more selling pressures ahead. Resistance for September Cocoa comes in at $2973 with $2866 and $2849 as support. Keep $2623 as a longer-term downside target.
Tags: Cocoa, Softs
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