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The market remains in a tight consolidation near the low end of a 5-month trading range and seems to have the supply fundamentals to move to another lower price level ahead. December cocoa continues to have difficulty with mounting a recovery from this month’s heavy sell off, as prices ended the day with a minor loss. Farmers from the Ivory Coast are projecting this season’s cocoa production will show a large increase over last year. Even the late season production may see a minor jump in production as some of the new crop may be ready early. The shift to a world production surplus for the coming season after a few tight years is likely to keep the price trend down unless there are developments in outside markets or the supply disappoints. For now, however, the market is pricing in a large main crop harvest which normally begins in September. Tightening exchange stocks continue to provide some support. While this season’s cocoa production from Cameroon will have nearly a 4% decline from last year, there are expectations that this shortfall will be fully recovered by the end of next season’s crop year. Yesterday was the first notice day for the September cocoa contract at the ICE with deliveries of 513 contracts posted. Arrivals for the week ending Sunday from the Ivory Coast increased to 9,000 tonnes from 2,022 tonnes for the same week last year. ICE cocoa warehouse stocks came in at 3.685 million bags, down 9,391 bags on the day.
TODAY’S GUIDANCE: While the market is attempting to form a base of support near the 2860-2850 level, the declining open interest during the consolidation phases is not a good sign for the bulls with speculators still holding a net long position in the last COT report. The market is in a short-term oversold condition so we can not rule out a recovery bounce but the pattern is typically considered a continuation of trend pattern and we would keep 2828 and maybe 2682 as downside objectives for December cocoa. Resistance is 2917 and 2979.
Cocoa Market Commentary – 2010.08.19
by Terry Roggensack on August 19, 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!
The market remains in a tight consolidation near the low end of a 5-month trading range and seems to have the supply fundamentals to move to another lower price level ahead. December cocoa continues to have difficulty with mounting a recovery from this month’s heavy sell off, as prices ended the day with a minor loss. Farmers from the Ivory Coast are projecting this season’s cocoa production will show a large increase over last year. Even the late season production may see a minor jump in production as some of the new crop may be ready early. The shift to a world production surplus for the coming season after a few tight years is likely to keep the price trend down unless there are developments in outside markets or the supply disappoints. For now, however, the market is pricing in a large main crop harvest which normally begins in September. Tightening exchange stocks continue to provide some support. While this season’s cocoa production from Cameroon will have nearly a 4% decline from last year, there are expectations that this shortfall will be fully recovered by the end of next season’s crop year. Yesterday was the first notice day for the September cocoa contract at the ICE with deliveries of 513 contracts posted. Arrivals for the week ending Sunday from the Ivory Coast increased to 9,000 tonnes from 2,022 tonnes for the same week last year. ICE cocoa warehouse stocks came in at 3.685 million bags, down 9,391 bags on the day.
TODAY’S GUIDANCE: While the market is attempting to form a base of support near the 2860-2850 level, the declining open interest during the consolidation phases is not a good sign for the bulls with speculators still holding a net long position in the last COT report. The market is in a short-term oversold condition so we can not rule out a recovery bounce but the pattern is typically considered a continuation of trend pattern and we would keep 2828 and maybe 2682 as downside objectives for December cocoa. Resistance is 2917 and 2979.
Tags: Cocoa, Softs
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