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The market is in a steep downtrend and in a transition year with growing expectations that supply will be higher than demand for the coming year. However, the sharp losses of the past few weeks have left futures oversold technically and a turn back down in the US dollar overnight may help spark a corrective bounce. December cocoa continued to extend its decline yesterday with fairly sharp losses, reaching its lowest price levels since July of 2009. Widespread forecasts for a global surplus during the upcoming crop year are beginning to have a negative impact on the cocoa market, as this would be a change from the deficits of recent years. Recent rains in the Ivory Coast have improved the prospects for this season’s cocoa crop. A mild rebound in the British Pound was able to provide a small amount of support to the cocoa market. A wet and sometimes cooler pattern in the Ivory Coast in the forecast into next week is not what the crop needs to mature ahead of harvest in the fall. Sun and less rain will help the crop mature and will help the crop avoid black pod disease. For now, conditions look favorable to see a large Ivory Coast crop and this could help boost estimates for a world production surplus. Surplus estimates are seen near 75,000-100,000 tonnes for the coming year and these likely assume steady growth in demand. Given the historically high prices of the past year and a weakening European and US economy, demand may not be as high as expected. There were 22 deliveries posted against the September contract bringing total deliveries so far to 609. ICE cocoa warehouse stocks were down 21,210 bags to 3.567 million bags.
TODAY’S GUIDANCE: The downside break-out leaves 2682 and then 2495 as longer-term downside objectives. Selling resistance emerges at 2810 and 2829 for December Cocoa.
Cocoa Market Commentary – 2010.08.26
by Terry Roggensack on August 26, 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 is in a steep downtrend and in a transition year with growing expectations that supply will be higher than demand for the coming year. However, the sharp losses of the past few weeks have left futures oversold technically and a turn back down in the US dollar overnight may help spark a corrective bounce. December cocoa continued to extend its decline yesterday with fairly sharp losses, reaching its lowest price levels since July of 2009. Widespread forecasts for a global surplus during the upcoming crop year are beginning to have a negative impact on the cocoa market, as this would be a change from the deficits of recent years. Recent rains in the Ivory Coast have improved the prospects for this season’s cocoa crop. A mild rebound in the British Pound was able to provide a small amount of support to the cocoa market. A wet and sometimes cooler pattern in the Ivory Coast in the forecast into next week is not what the crop needs to mature ahead of harvest in the fall. Sun and less rain will help the crop mature and will help the crop avoid black pod disease. For now, conditions look favorable to see a large Ivory Coast crop and this could help boost estimates for a world production surplus. Surplus estimates are seen near 75,000-100,000 tonnes for the coming year and these likely assume steady growth in demand. Given the historically high prices of the past year and a weakening European and US economy, demand may not be as high as expected. There were 22 deliveries posted against the September contract bringing total deliveries so far to 609. ICE cocoa warehouse stocks were down 21,210 bags to 3.567 million bags.
TODAY’S GUIDANCE: The downside break-out leaves 2682 and then 2495 as longer-term downside objectives. Selling resistance emerges at 2810 and 2829 for December Cocoa.
Tags: Cocoa, Softs
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