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A weak US dollar and continued talk of London futures trading near 32-year highs helped to support the market overnight but traders should be watching out for a near-term top “if” the outside market forces turn a bit more negative. We remain concerned that the financial markets could spark another round of long liquidation selling from speculators in commodities soon and that European demand issues will re-surface as a negative force. July cocoa continued to make new highs for this rally, but failed to hold onto early gains yesterday and headed back towards unchanged levels. Brazilian arrivals for the 2009/10 season were down over 6% from last year’s levels. Heavy rains in the Ivory Coast have contributed to tight cocoa supplies from that nation but the rains should be beneficial for the main crop later this year. The rains are also beneficial to late developing mid-crop but there are some concerns over fungus issues and issues about getting cocoa to markets during a period of too much rain which slows transportation. The main crop harvest in Indonesia is also picking up steam but there is also talk of some quality issues due to too much rain in recent weeks. A sell-off in the British Pound helped to limit the upside yesterday but outside market forces turned more positive last this week as traders suspect good economic news in the US on employment could be a good sign for the global economy and the outlook for demand. ICE warehouse stocks were down 12,313 bags to 4.438 million bags.
TODAY’S GUIDANCE: There is tightness in near-term supply but the market also faces very high prices for beans and products and demand expectations may be set a bit too high. Discretionary spending may come in below expectations; especially in Europe.
TODAY’S MARKET IDEAS: Unless there is more to the supply concerns supporting the current bounce, the market appears set to trade in a range over the near-term after recent steep uptrend and downtrend spurts. Resistance is at $3084 with support back at $2973. It will take a close over $3158 to turn the pattern more bullish. The bulls are counting on strong cocoa demand and also strong demand for commodity markets in general.
Cocoa Market Commentary – 2010.06.04
by Terry Roggensack on June 4, 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!
A weak US dollar and continued talk of London futures trading near 32-year highs helped to support the market overnight but traders should be watching out for a near-term top “if” the outside market forces turn a bit more negative. We remain concerned that the financial markets could spark another round of long liquidation selling from speculators in commodities soon and that European demand issues will re-surface as a negative force. July cocoa continued to make new highs for this rally, but failed to hold onto early gains yesterday and headed back towards unchanged levels. Brazilian arrivals for the 2009/10 season were down over 6% from last year’s levels. Heavy rains in the Ivory Coast have contributed to tight cocoa supplies from that nation but the rains should be beneficial for the main crop later this year. The rains are also beneficial to late developing mid-crop but there are some concerns over fungus issues and issues about getting cocoa to markets during a period of too much rain which slows transportation. The main crop harvest in Indonesia is also picking up steam but there is also talk of some quality issues due to too much rain in recent weeks. A sell-off in the British Pound helped to limit the upside yesterday but outside market forces turned more positive last this week as traders suspect good economic news in the US on employment could be a good sign for the global economy and the outlook for demand. ICE warehouse stocks were down 12,313 bags to 4.438 million bags.
TODAY’S GUIDANCE: There is tightness in near-term supply but the market also faces very high prices for beans and products and demand expectations may be set a bit too high. Discretionary spending may come in below expectations; especially in Europe.
TODAY’S MARKET IDEAS: Unless there is more to the supply concerns supporting the current bounce, the market appears set to trade in a range over the near-term after recent steep uptrend and downtrend spurts. Resistance is at $3084 with support back at $2973. It will take a close over $3158 to turn the pattern more bullish. The bulls are counting on strong cocoa demand and also strong demand for commodity markets in general.
Tags: Cocoa, Softs
About Terry Roggensack