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A strong pound against the US dollar may have sparked some short-covering which fed on itself to release some aggressive buying and short-covering for the cocoa market. Some talk of the small world production deficit for the 2009/10 season and the resulting tightness in supply helped to support but the rally did not seem to come from tightness in the cash market or from commercial demand. September cocoa made a sharp rally out of its recent trading range, finishing the session yesterday with heavy gains and at its highest close since June 4th. A major turnaround in the British Pound added to the market’s near-term strength. While arrivals in the Ivory Coast have made a late-season surge, season totals are still running over 1% behind last year’s levels. While there is some talk of potential wetness issues with the Ivory Coast crop due to too much rain, the rains would suggest a bearish supply outlook for the main crop for harvest in the 4th quarter. Indonesia lowered their base export price and the country plans to hold the bean 10% export tax in place for July. Early estimates for the upcoming season’s production from the Ivory Coast call for this year’s crop to exceed last year by at least 1.5% and weekly arrivals picked up to near 18,000 tonnes this week from near 7,000 tonnes for the same week last year. ICE warehouse exchange stocks were down 18,246 bags yesterday to 4.215 million bags.
TODAY’S GUIDANCE: The market took out last week’s lows early yesterday but could not generate new selling interest and the strong short-covering bounce caused the market to close over the 100-day moving average for the first time since May 6th. The technical action is impressive but the market does not seem to have the longer-term fundamentals to see much follow-through to the upside.
TODAY’S MARKET IDEAS: Key resistance for September cocoa comes in at $3084 and it will take a close above this level to turn the charts decisively bullish. Support is at $3028 and $2973.
Cocoa Market Commentary – 2010.06.23
by Terry Roggensack on June 23, 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 strong pound against the US dollar may have sparked some short-covering which fed on itself to release some aggressive buying and short-covering for the cocoa market. Some talk of the small world production deficit for the 2009/10 season and the resulting tightness in supply helped to support but the rally did not seem to come from tightness in the cash market or from commercial demand. September cocoa made a sharp rally out of its recent trading range, finishing the session yesterday with heavy gains and at its highest close since June 4th. A major turnaround in the British Pound added to the market’s near-term strength. While arrivals in the Ivory Coast have made a late-season surge, season totals are still running over 1% behind last year’s levels. While there is some talk of potential wetness issues with the Ivory Coast crop due to too much rain, the rains would suggest a bearish supply outlook for the main crop for harvest in the 4th quarter. Indonesia lowered their base export price and the country plans to hold the bean 10% export tax in place for July. Early estimates for the upcoming season’s production from the Ivory Coast call for this year’s crop to exceed last year by at least 1.5% and weekly arrivals picked up to near 18,000 tonnes this week from near 7,000 tonnes for the same week last year. ICE warehouse exchange stocks were down 18,246 bags yesterday to 4.215 million bags.
TODAY’S GUIDANCE: The market took out last week’s lows early yesterday but could not generate new selling interest and the strong short-covering bounce caused the market to close over the 100-day moving average for the first time since May 6th. The technical action is impressive but the market does not seem to have the longer-term fundamentals to see much follow-through to the upside.
TODAY’S MARKET IDEAS: Key resistance for September cocoa comes in at $3084 and it will take a close above this level to turn the charts decisively bullish. Support is at $3028 and $2973.
Tags: Cocoa, Softs
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