Cocoa futures are hovering just below its multi-year highs and the rise in production from country’s such as the Ivory Coast – which supplied 40% of world’s cocoa demand last year – may be prompting the market to back off because of lessor demand. Cocoa futures are down $10 today currently trading at $3,082 per ton at the Intercontinental Exchange.
The Ivory Coast’s Mont Peko Nat’l Park is reported to have an illegal population of 28K farmers taking advantage of the cocoa production boom which, officials say, have destroyed 99% of the 34K hectares park. The unprotected forests in the entire area account for the 600K tons of increased production from the 2000/1 season.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shares her view regarding the fundamental situation of the cocoa futures markets by stating, “The cocoa farmers in West Africa have been doing all they can to keep supply matched with demand, but doing so illegally and now being forced away from farming (in the national park) may change the fundamental dynamics for this market.” Levy added, “Cocoa futures could head right back up to their 2011 highs if the supply isn’t there.”
Cocoa futures trend has just rolled over to the down side late last week. In the overall picture of cocoa futures, it may be in a sideways trading pattern unless it can close weaker than $3,000 per ton, or close higher than $3,400 – the current trading range since mid-May.
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