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Cocoa Market Analysis

May cocoa was able to post an early high for the move but has lost upside momentum this morning. Despite this pullback, cocoa prices remain close to their highest price levels since late January. The prospect for tighter upcoming cocoa supplies out of West Africa continue to provide considerable support for the market, as dry conditions are likely to have a negative effect on this season’s Ivory Coast mid-crop. Improving macro-economic sentiment will help to underpin prices at these current levels, as many markets continue to shift towards a “risk on” market mentality. This morning’s strong private survey of the German business climate may be an early indicator of higher European cocoa demand levels during the first quarter of this year. The market is a bit overbought but the shift to the longer-term fundamentals to a more positive tilt suggests that breaks are buying opportunities.

Technical Analysis

COCOA (MAY): A positive indicator was given with the upside crossover of the 9 and 18 bar moving average. Momentum studies are trending higher but have entered overbought levels. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside objective is at 2486. The next area of resistance is around 2465 and 2486, while 1st support hits today at 2411 and below there at 2379.

 

StockMarketNews Research Team 

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