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Our longer term viewpoint is bearish for cocoa, but tightness in New York and London are supportive near-term. Exchange stocks continue to decline, which should keep bears cautious. London is trading at a stiff premium to New York, and nearby London contracts are trading at a premium to the deferred contracts. The large number of contracts still open on the soon-to-expire London July futures is also sparking concerns that as much as four-fifths of the exchange stocks could be used up in the delivery process, leaving precious little for the September delivery. On top of that, heavy rains in the Ivory Coast are raising concerns over disease problems. Supplies tend to be tight this time of year, ahead of the main crop arrivals which begin in October, and there seems to be a concern over the chance for some extreme tightness this year. September cocoa came under mild pressure yesterday but remained well entrenched within its recent trading range. A late sell-off in the British Pound weighed on the cocoa market, and the ongoing delivery situation with the London contract appeared to have little impact on NY prices yesterday. Cumulative port arrivals in the Ivory Coast for this season continue to gain ground, but they still remain close to 1% behind last season’s levels. Heavy rains continue to have a negative impact on this season’s cocoa crop in the Ivory Coast, due to transportation issues and the potential for disease outbreaks. ICE exchange warehouse stocks were down 30,187 bags to 4.073 million. A selling trend from fund traders and speculators as indicated in the recent COT reports could be seen as a short-term bearish force. It may not take much in the way of positive action in London to spark a significant run higher in New York.
TODAY’S GUIDANCE: With a potentially volatile situation developing in London, the NY futures could be taking their cues from that market over the near term. The US stock market was higher in overnight futures trade, and if it continues to gain ground today, it in could also lend support. If the market breaks out of the recent consolidation with a move above $3028, it would be considered supportive. Look for support at $2974 and consider $3084 and $3227 as upside objectives if $3028 is taken out.
Cocoa Market Commentary – 2010.07.13
by Research on July 13, 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!
Our longer term viewpoint is bearish for cocoa, but tightness in New York and London are supportive near-term. Exchange stocks continue to decline, which should keep bears cautious. London is trading at a stiff premium to New York, and nearby London contracts are trading at a premium to the deferred contracts. The large number of contracts still open on the soon-to-expire London July futures is also sparking concerns that as much as four-fifths of the exchange stocks could be used up in the delivery process, leaving precious little for the September delivery. On top of that, heavy rains in the Ivory Coast are raising concerns over disease problems. Supplies tend to be tight this time of year, ahead of the main crop arrivals which begin in October, and there seems to be a concern over the chance for some extreme tightness this year. September cocoa came under mild pressure yesterday but remained well entrenched within its recent trading range. A late sell-off in the British Pound weighed on the cocoa market, and the ongoing delivery situation with the London contract appeared to have little impact on NY prices yesterday. Cumulative port arrivals in the Ivory Coast for this season continue to gain ground, but they still remain close to 1% behind last season’s levels. Heavy rains continue to have a negative impact on this season’s cocoa crop in the Ivory Coast, due to transportation issues and the potential for disease outbreaks. ICE exchange warehouse stocks were down 30,187 bags to 4.073 million. A selling trend from fund traders and speculators as indicated in the recent COT reports could be seen as a short-term bearish force. It may not take much in the way of positive action in London to spark a significant run higher in New York.
TODAY’S GUIDANCE: With a potentially volatile situation developing in London, the NY futures could be taking their cues from that market over the near term. The US stock market was higher in overnight futures trade, and if it continues to gain ground today, it in could also lend support. If the market breaks out of the recent consolidation with a move above $3028, it would be considered supportive. Look for support at $2974 and consider $3084 and $3227 as upside objectives if $3028 is taken out.
Tags: Cocoa, Softs
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