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Cocoa Market Analysis

May cocoa has been unable to hold early gains this morning as prices are holding close to this week’s lows. Today’s initially lukewarm reception to the European Central Bank’s Longer-Term Refinancing Operation may be dampening overall market sentiment but a tight supply situation in West Africa is helping to underpin cocoa prices
within their recent trading range. With Ivory Coast cocoa port arrivals already well behind last season’s pace, reports of higher cash prices there may be a strong indication that the upcoming mid-crop may come in well below expectations. Of the world’s major cocoa-producing nations, only Indonesia is widely expected to improve upon last season’s production levels. An upside breakout in the British Pound may help to encourage arbitrage buying of ICE cocoa versus the LIFFE contract.
The cocoa market may have some difficulty overcoming the negative headwinds coming out of the Euro zone early in today’s session. A generally positive supply/demand situation is likely to support cocoa prices at these current levels, however, and a retest of last week’s lows could present a buying opportunity for May cocoa.

Technical Analysis

COCOA (MAY): Momentum studies are trending higher but have entered overbought levels. The market’s short-term trend is negative as the close remains below the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The near-term upside target is at 2493. The next area of resistance is around 2424 and 2493, while 1st support hits today at 2316 and below there at 2277.

 

StockMarketNews Research Team 

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