Cocoa futures have been on a rollercoaster since February (albeit one could argue December) and if one analyst is correct there is more volatility ahead. Cocoa futures are down 14 points today currently trading at $2,991 per ton for September delivery at the Intercontinental Exchange in New York City.
Its not only the uncertainty of the West African cocoa crop prospects, but with last year’s deficit there may need to be heavy production to make up the shortfall. The ongoing weather outlook is believed to be the catalyst for the cocoa market trading erratically.
Judith Ganes Chase, a leading independent consultant for soft commodities, shared her fundamental view of the cocoa futures market by stating, “Following a production deficit of 180,000 tonnes in 2015-16, conditions need to be very favorable to close this gap and swing the market to a large surplus.” Gates Chase adds, “This will be more of a challenge with cocoa processing margins now attractive, leading to improved demand.”
The trend for cocoa futures is “sideways” and at a crossroad. If cocoa futures were to sustain trading above 3200, we may see an up-trend, but a breakout below the February lows of 2750 may take the market lower.
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