Cocoa Market - 1970 - Current
The Cocoa Market took another jump. Understand that Cocoa is heavily traded in the commodity market and could see a bullish run in the near future. (I am a bit Bullish)
I have listed 5 indicators of a possible bullish market.
5 Indicators that Cocoa could go to the BULLS
#1: Weather
The dryness levels in many countries are keeping the cocoa high. Articles have been written that West Africa had a hot and dry streak in past years. These kinds of articles only fuel the spike. Ivory Coast is not expecting any real rain for months. Meteorologists predict that weekly rains will not exceed one inch per week. No rain… not enough cocoa.
#2: Tech & Charts
I’ve added a chart of 1970 to present. Cocoa prices rise in a global recession. Looking into the futures markets, contacts being sold in the spring months such as March or April are trading at a higher price than the winter months. This should send strong signals to buyers that a bullish trend is on its way.
#3: Supply & Demand
As I had reported in yesterday’s blog supply has been hurt. Ivory Coast farmers have been complaining about crops being hurt by weather and black pod disease. Some parts of Africa have been very dry. Ivory Coast has seen extremely damp conditions which helps the spread of black pod. Reports have spread that Ghana is facing worsening conditions. The demand for cocoa in India and China is still astronomical. The demand for chocolate is a global issue and not just in the U.S.A. Countries are expanding at such high rates that consumption of everyday commodities is high. Supply is in trouble and the demand is rising every day. There is a relationship between currencies and other commodities. The weak Pound along with a with a weakening supply is a trend that needs to be watched.
#4: Forecasts
Forecasts for cocoa is significantly down. Many reports have shown that the Ivory Coast forecast is to be about 1 million tons in 2009 - which is 300,000 less tons than in 2008. Exports have slid downward towards 30% in the latter part of 2008 from the Ivory area.
#5: Speculators
Speculators have been known to move the cocoa market. Their current actions show that they are being bullish. It has been reported that speculators positions are lopsided, meaning they are holding either more puts than calls or vice-versa. Currently are holding more calls than puts, another indication of their bullish stance on cocoa.
Current Cocoa Market
Delayed Futures -13:20 - Friday, 13 March
Contract Last Change Open
Mar '09 (CCH9) 2378s +41 0
May '09 (CCK9) 2385 +45 2384
Jul '09 (CCN9) 2385 +44 2390
Sep '09 (CCU9) 2409 +70 2395
Dec '09 (CCZ9) 2368 +36 2410
Mar '10 (CCH0) 2360 +35 2394
May '10 (CCK0) 2366s +41 0
Jul '10 (CCN0) 2376s +42 0
Sep '10 (CCU0) 2373s +42 0
Dec '10 (CCZ0) 2397s +49 0
0 comments:
Post a Comment