🍫 COCOA dips 6%

📉 Futures Under Pressure of West Africa Rain Forecasts and Record Inventory Build on ICE

Cocoa futures are down nearly 6% today, hitting a two-month low. Once again, the cause of the panic sell-off and spike in volatility is the forecast of heavy rainfall in West Africa — a key cocoa-producing region. Such weather signals favorable growing conditions. According to forecasts from Vaisala, moderate to heavy rainfall has persisted in West Africa over the past few days and is expected to continue through the end of this week.

Not only is the weather pointing to larger and higher-quality crops, but rising inventories on ICE are also supporting the bears. Since January 24, when U.S. port cocoa stockpiles hit a 21-year low around 1.26 million bags, they have risen to the highest level in over 9¼ months — 2,363,861 bags as of June 18. Additionally, government data from Ivory Coast shows that farmers delivered 1.66 million tons of cocoa to ports between October 1 and June 15 in the current marketing season — an increase of nearly 6.5% year-over-year.

Source: xStation5