Cocoa prices retreated nearly 11% at the start of the week after West Africa began to see slightly more rainfall, quieting fears that the next crop season will be severely curtailed. The shift toward wetter weather over growing areas in West Africa may provide some benefit to upcoming production in the region in the medium term. Keep in mind, however, that the current weather conditions must persist for an extended period of time to actually change expectations for harvests.
Keep in mind that Ghana, Côte d'Ivoire, Nigeria and Cameroon together account for about 75% of global cocoa production, but are at risk of poor yields this year in the face of unfavorable weather conditions. Source: Zoom Earth
Not least of all, after a huge surge, the positioning of fund managers is the least upwardly focused in more than 14 months. According to CFTC data, the number of funds' open long positions in cocoa futures fell 3,299 lots to 30,369 in the week ending April 23.
Cocoa prices are already down more than 11%, and thus are trading below the April 16 low zone and the support zone set by the 100-period exponential moving average (purple curve on the chart). Source: xStation 5
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