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Cocoa Market Analysis

July cocoa is under moderate pressure this morning but has already made a recovery from an early test of this week’s lows. A slumping Dollar and stronger global equity markets are providing mild support for cocoa prices this morning, although the market is having trouble climbing back into positive territory early in the session. North American first quarter cocoa grinding numbers were released after yesterday’s close, which showed a 4% decline from last year’s figures. This was near the lower end of market expectations but was mainly due to an upward revision to last year’s first quarter grinding numbers. The magnitude of this decline may not have come as a total surprise to the market, as ICE exchange cocoa stocks remain fairly close to record high levels. The focus of the cocoa market is likely to shift back towards the near-term supply situation in West Africa, as officials from Ghana are now forecasting this season’s crop will fall short of earlier estimates. A report that this season’s cocoa exports from Cameroon at the end of January were down 14% from last season’s levels is likely to provide additional support for the market.
The North American cocoa grindings data may have fallen short of expectations but were not poor enough to totally derail the market’s recent recovery. As long as the market’s focus remains on a tightening supply situation in West Africa, July cocoa should find enough underlying support to recover from early pressure this morning. Positive outside market factors will also help to keep further declines in check.

Technical Analysis

COCOA (JUL): Positive momentum studies in the neutral zone will tend to reinforce higher price action. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The near-term upside objective is at 2292. The next area of resistance is around 2264 and 2292, while 1st support hits today at 2204 and below there at 2172.

 

StockMarketNews Research Team

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