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TECHNICAL ANALYSIS OF COCOA
Last week, ICE U.S. cocoa futures closed sharply lower at $2,294 per ton, losing more than $200 in one week. First, the worsening health situation with a sharp increase in covid-19 cases in the U.S. and Europe had a strong impact on markets last week. In front of the magnitude of the 2nd wave, Europe is reconfirming itself, this is the case of Ireland, Czech Republic, France, Germany, England, Portugal, Austria, and countries like Spain or Italy and others are taking more and more drastic measures, such as curfews, closing bars and restaurants, or limiting people in meetings.
Then, after a very good harvest 2019/20, the season 2020/21, starts very strong with arrivals in Ivorian ports which are 317K tons as of October 25, against 208K tons at the same period the previous season. Grinding reports for the third quarter were down 4.7% in Europe, down 4.02% in the USA, and down 10.1% in Asia.
And finally, last week the Coffee and Cocoa Council learned that Ivory Coast was having difficulty selling the remaining 500K tonnes of its 2020/21 intermediate crop. Indeed, to guarantee a fixed price to producers, the harvest is mainly sold in advance.
The Ivorian presidential election held Saturday, October 31, had raised cocoa prices from 2330 to just over 2500 dollars per ton. Investors fearing violence. The toll is heavy with about thirty dead and a hundred injured since President Ouattara announced his candidacy for a third term. The election was held and Alassane Ouattara should be re-elected with an overwhelming majority. 23% of the polling stations could not open because of degradation or blockades, under the slogan of civil disobedience of the opposition. But the investors have decided, the situation is not serious enough to disrupt the supply of cocoa for the moment. The official results will be announced normally before Tuesday, and the reaction of the opposition and future events will be monitored.
In the United States, the American election is scheduled for tomorrow, November 3, and market tensions are not excluded. Investors fear the possibility that Donald Trump will be declared a narrow loser and do not want to recognize the results, making the transition more complicated and delaying the vote on the long-awaited plan to support the U.S. economy.
WEATHER IN WEST AFRICA
Ivory Coast experienced above normal rainfall in September and October. Last week's rains were above the five-year average in most cocoa-producing areas of Ivory Coast, with 25-50 mm of rainfall, with very heavy rains in the south and southwest of the country. The Agboville region, for example, received up to 150mm of rainfall. The forecasts in Ivory Coast and Ghana are now in line with normal for the next 2 weeks.
ICE US CERTIFIED COCOA STOCKS
Cocoa stocks are down sharply to 3456 against 3500 thousand 60 kg bags last week. ICE US and EU cocoa stocks have risen above last season's stocks at the same time.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week up to 93.882. The 2nd epidemic wave is scaring the market and the Dollar seems to be playing its role as a safe-haven currency. The chances of a quick agreement on a plan to support the U.S. economy are now nil. We will have to wait now for the election result, and this is beneficial to the Dollar in the short term.
On the FED side, things will certainly remain frozen until the outcome of the American election. The FED has insisted on the need for a quick vote of a support plan, and they assure that the key rates will remain permanently low.
A low dollar is generally favorable for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cocoa futures markets is up this week to 20.449 K instead of 13.928 K.
TECHNICAL ANALYSIS OF COCOA
Last week, ICE U.S. cocoa futures closed sharply lower at $2,294 per ton, losing more than $200 in one week. First, the worsening health situation with a sharp increase in covid-19 cases in the U.S. and Europe had a strong impact on markets last week. In front of the magnitude of the 2nd wave, Europe is reconfirming itself, this is the case of Ireland, Czech Republic, France, Germany, England, Portugal, Austria, and countries like Spain or Italy and others are taking more and more drastic measures, such as curfews, closing bars and restaurants, or limiting people in meetings.
Then, after a very good harvest 2019/20, the season 2020/21, starts very strong with arrivals in Ivorian ports which are 317K tons as of October 25, against 208K tons at the same period the previous season. Grinding reports for the third quarter were down 4.7% in Europe, down 4.02% in the USA, and down 10.1% in Asia.
And finally, last week the Coffee and Cocoa Council learned that Ivory Coast was having difficulty selling the remaining 500K tonnes of its 2020/21 intermediate crop. Indeed, to guarantee a fixed price to producers, the harvest is mainly sold in advance.
The Ivorian presidential election held Saturday, October 31, had raised cocoa prices from 2330 to just over 2500 dollars per ton. Investors fearing violence. The toll is heavy with about thirty dead and a hundred injured since President Ouattara announced his candidacy for a third term. The election was held and Alassane Ouattara should be re-elected with an overwhelming majority. 23% of the polling stations could not open because of degradation or blockades, under the slogan of civil disobedience of the opposition. But the investors have decided, the situation is not serious enough to disrupt the supply of cocoa for the moment. The official results will be announced normally before Tuesday, and the reaction of the opposition and future events will be monitored.
In the United States, the American election is scheduled for tomorrow, November 3, and market tensions are not excluded. Investors fear the possibility that Donald Trump will be declared a narrow loser and do not want to recognize the results, making the transition more complicated and delaying the vote on the long-awaited plan to support the U.S. economy.
WEATHER IN WEST AFRICA
Ivory Coast experienced above normal rainfall in September and October. Last week's rains were above the five-year average in most cocoa-producing areas of Ivory Coast, with 25-50 mm of rainfall, with very heavy rains in the south and southwest of the country. The Agboville region, for example, received up to 150mm of rainfall. The forecasts in Ivory Coast and Ghana are now in line with normal for the next 2 weeks.
ICE US CERTIFIED COCOA STOCKS
Cocoa stocks are down sharply to 3456 against 3500 thousand 60 kg bags last week. ICE US and EU cocoa stocks have risen above last season's stocks at the same time.
THE DOLLAR
The DXY index representing the Dollar against a basket of foreign currencies closed last week up to 93.882. The 2nd epidemic wave is scaring the market and the Dollar seems to be playing its role as a safe-haven currency. The chances of a quick agreement on a plan to support the U.S. economy are now nil. We will have to wait now for the election result, and this is beneficial to the Dollar in the short term.
On the FED side, things will certainly remain frozen until the outcome of the American election. The FED has insisted on the need for a quick vote of a support plan, and they assure that the key rates will remain permanently low.
A low dollar is generally favorable for dollar-denominated commodity markets.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the cocoa futures markets is up this week to 20.449 K instead of 13.928 K.