Last week, ICE U.S. cocoa closed higher at $2,766 a ton.
Some manufacturers bought cocoa directly on the markets to avoid paying the LID, a $400 premium introduced by Ghana and Ivory Coast to ensure a decent income for producers. The result has been a decline in ICE stocks that fuels speculation. It should be recalled that according to forecasts, the next harvest will be in surplus, and that in early November, the Coffee and Cocoa Council announced that it was having trouble selling 500K tons of cocoa from its intermediate harvest.
For the 2020/21 season, the arrivals in Ivorian ports are 646K tons as of November 22, against 518K tons at the same period the previous season.
Cocoa stocks are down to 3111 thousand 60 kg bags.
The dry period in West Africa has begun and runs from mid-November to March. Producers hope that the Harmattan will not come too early this year. It is a dusty wind coming from the northeast of the Sahara that blows during the dry season. Harmattan can have a negative impact on crops. The wind would already be present in the northern part of the country, which explains why rainfall was already more concentrated in the coastal areas. The moisture in the soil should allow for an abundant harvest until the end of January-February, according to producers.
Internationally, the prospect of Janet Yellen, former FED president, serving as secretary of the treasury in Joe Biden's future administration, and the hope of a vaccine is fuelling markets. Many countries are preparing vaccination campaigns. Investors are also anticipating a massive stimulus package, with increased government spending, which is weakening the dollar. The dollar is still low and in a downward trend, the DXY closes at 91.790.
While waiting for a vaccine, the pandemic is not weakening. We have just passed 62 million cases worldwide, with more than 1.460 million deaths . The United States is the most affected country with more than 267,000 deaths and more than 13 million cases.
WEATHER IN WEST AFRICA
Ivory Coast and Ghana experienced above normal rainfall in October with an average rainfall of more than 150mm. They were more mixed in November. As can be seen on the 30 day maps below only the southern parts of these 2 countries received above normal rainfall and the northern parts were 50mm below normal. Cocoa trees are more affected by rainfall than any other climatic factor. The dry season started in Ivory Coast and Ghana and lasts from mid-November to March. Producers hope that the Harmattan will not come too early this year. It is a dusty wind from the northeast of the Sahara that blows during the dry season. Harmattan can have a negative impact on crops. The wind would already be present in the northern part of the country, which explains why rainfall was already more concentrated in the coastal areas.
ICE US CERTIFIED COCOA STOCKS
Cocoa stocks are down to 3111 from 3170 thousand 60 kg bags the previous week. ICE US and EU cocoa stocks rose above last season's stocks at the same time.
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 91.790, and the trend is still . This is the first close below the 92 in almost 2 1/2 years. The presumed appointment of Janet Yellen as U.S. Treasury Secretary and Joe Biden's talk of a massive $3 trillion support package weighed on the Dollar. Forex traders are anticipating an increase in the money supply. In addition, U.S. unemployment figures, consumer confidence indexes and figures disappointed last week.
A low Dollar is generally favorable to the Dollar-denominated markets.