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Cocoa market 10/12/2020.

Cocoa market 10/12/2020.

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REVIEW THE TECHNICAL ANALYSIS OF COCOA

Last week, U.S. cocoa futures contracts on the ICE closed lower at $2,432 per tonne. Prices are now trading below $2,500, and the trend is downward.
The new 2020/21 season has officially begun and Ivory Coast producers are confident, hoping for a larger crop than last year until December. Arrivals in Ivorian ports are 2.074 Mtonnes for the 2019/20 season, 4.2% less than the previous year. US ICE and EU cocoa stocks are now higher than last year's stocks at the same time period. Cocoa prices have benefited from the low stocks so far.
On the demand side, we are still facing a worsening health situation, particularly in Europe, and the pandemic is not over in the US as the Halloween season approaches the end of the month. Reports on cocoa grindings will be released this week and will be essential to make a true assessment of demand.
The announcement, less than a month before the U.S. election, of Donald Trump's positive test for coronavirus fueled the news. Exceeded in the polls, and close to the November 3 deadline, he made a number of statements that made the situation confusing, particularly with regard to the US stimulus plan. The American President decided to suspend negotiations with the Democrats, then announced targeted aid for sectors in difficulty and direct financial aid to households. On Friday, the White House announced the continuation of discussions for a plan of nearly $2 trillion. The various developments and the sometimes contradictory statements in the run-up to the American election point to increased volatility on all markets.
The Ivorian presidential election will take place at the end of the month, on October 31. Tensions, which have resulted in some 15 deaths , have been deplorable since President Ouattara decided to run for a third term, which the opposition considers unconstitutional. A meeting in which the opposition showed itself united for the first time took place on Saturday at the Félix Houphouët Boigny stadium in Abidjan, gathering 30,000 people. Former President Henri Konan Bédié asked the UN to take up the "Ivorian file". Ivory Coast is the world's largest producer of cocoa .

COCOA WEATHER REVIEW IN WEST AFRICA

Below-average rains in West Africa during July-August gave way to above-normal rains in September and early October. Black pod disease is showing limited signs at this time. This disease appears in the case of excessive rainfall. Future rainfall should be monitored and should be interspersed with periods of sunshine . Last week, rainfall was above normal in most of the cocoa producing regions of Cote d'Ivoire. Ivorian producers are expecting a larger crop than last year if rains and sunny periods continue this month. Seasonal forecasts for October for the entire cocoa belt in West Africa predict rainfall 40 to 60 mm above normal.

REVIEW OF ICE CERTIFIED COCOA STOCKS

Cocoa stocks are down to 3625 thousand 60 kg bags compared to 3654 of the previous week. Note that ICE US and EU cocoa stocks are higher than last year at the same period.

DOLLAR REVIEW

The DXY index representing the USD against a basket of foreign currencies closed yesterday's trading at 93.05. The DXY index, which represents the USD against a basket of foreign currencies, was unchanged at 93.05. Will there, won't there be a U.S. stimulus package? The situation is very confusing, with Donald Trump multiplying contradictory statements. After blowing hot and cold, the U.S. president announced ongoing discussions with the Democrats. On the FED side, things will certainly remain frozen until the outcome of the American election. On Wednesday, the FED minutes insisted on the need for a quick vote on a support plan, and assured that the key rates will remain permanently low.
A low dollar is generally favorable for dollar-denominated commodity markets.

REVIEW OF THE 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 includes the position of commercial traders (producers, commodity buyers, ...) but also non-commercial traders (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 down this week to 28.106K.

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