COCOA rebounds 2.5% above $9100 supported by weak US dollar 💵

Cocoa futures (COCOA) are outperforming all other agricultural commodities traded on the ICE and CBOT exchanges today. After dipping below $9,000 per ton twice, bulls have reclaimed this key level, pushing prices toward $9,100 and testing recent local highs. The weak U.S. dollar continues to support upward momentum in the cocoa market, and improved weather patterns in Africa have not been sufficient to sustain a pullback. The dollar's depreciation has triggered potential short covering in cocoa contracts.

Mixed fundamentals in the Cocoa Market

The overall picture of cocoa market fundamentals remains mixed.

• Improved weather in West Africa has benefited cocoa crops in the Ivory Coast and Ghana, potentially increasing supply.

• Hershey and Mondelez reported declining Q1 sales, citing high cocoa prices and tariffs affecting consumer demand.

• ICE-monitored cocoa inventories in U.S. ports rebounded to a 7-month-high, indicating improved supply levels.

• Nigeria's cocoa exports increased by 24% year-over-year in March, adding to global supply concerns.

• Quality issues in the Ivory Coast's mid-crop harvest have led to processors rejecting some cocoa beans.

• Ivory Coast's cocoa exports slowed, with a smaller increase compared to previous months, raising supply concerns.

• Global cocoa demand showed resilience, with Q1 grindings in North America, Europe, and Asia declining less than expected. Nevertheless, shares of major global processor Barry Callebaut (BARN.CH) remain at multi-year lows.

• Rabobank forecasts a 9% decrease in the Ivory Coast's mid-crop yield due to late rains.

• The International Cocoa Organization (ICCO) projects a global cocoa surplus of 142,000 metric tons for 2024/25, the first in four years. In the 2023/24 season, the deficit amounted to 441,000 metric tons, the largest in over 60 years.

• Ghana's cocoa harvest forecast was reduced by 5% due to weather challenges, supporting prices.

Technical Analysis (M30 Interval)

The chart shows a potential bullish crossover of the MACD and RSI indicators near overbought levels. Prices have risen above the EMA50 and EMA200, suggesting a return to upward trends in the market. The rebound is also supported by a double bottom formation around $8,500 per ton. In addition to cocoa contracts, coffee is also gaining.

Soruce: xStation5