The cocoa market has been experiencing very strong growth since the beginning of this week, as concerns have been raised about the current harvest in Ivory Coast. Currently, the harvest is proceeding smoothly and shipments to ports are up to 30% higher than last year. However, recent quite a bit of rainfall in some areas of the country has led to mold growth in dried cocoa beans and some shipments are not being accepted by traders. In addition, drought and high temperatures in other areas are threatening cocoa trees ahead of the so-called mid-season, which begins in April. Nonetheless, the rains are now crucial from the perspective of the ongoing main season. Excessive amounts of these are causing supply problems and could lead to tree diseases and mold formation during the last key period of the main harvest in December. At the same time, we are seeing a further decline in cocoa stocks at New York ports (cocoa for futures delivery), which are now at their lowest since 2005.
Cocoa prices are up about 17% this week. The price is now at its highest since mid-October and is testing the area around $8200 per ton. The upward trend line was broken yesterday. The current rise appears to be speculative, but further problems in supply could lead to a breakout of resistance near $8400 per ton. Then the way will be opened to resistance near $10000. Cocoa was last at these levels in June.
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