Cocoa Prices Fall To Critical Technical Support Level On Improving Ivory Coast Outlook 

Tyler Durden's Photo
by Tyler Durden
Monday, Jul 01, 2024 - 07:40 PM

Commodity traders are closely watching a triangle pattern forming in New York cocoa prices.

According to Bloomberg, top grower Ivory Coast's cocoa production is forecasted to rise in the next growing season. This news pressured prices to the lower support level of the triangle, around the mid-$7,500 per ton mark, and down from the near $12,000 level achieved in mid-April when traders were spooked by adverse weather conditions denting global supplies in Ivory Coast and Ghana. 

The West African producer is likely to harvest 2 million tons of the chocolate-making ingredient in the 2024-25 crop year that starts Oct. 1, according to people familiar with the matter, who cited early pod counting.

The outlook for the upcoming year compares with the 1.8 million tons the International Cocoa Organization estimates the country will harvest by the end of the current season in September. Ivory Coast's output averaged 2.2 million tons in the five years before 2023-24.

The country has sold 800,000 tons of the 2024-25 harvest already on the forward market, the people said, asking not to be named because they were not authorized to discuss the matter. However, forward sales have since been paused by the industry regulator Le Conseil Cafe-Cacao, they added. -Bloomberg

With prices easing due to the beneficial impact of improving weather conditions and better crop outlooks for the next growing season in West Africa, famed commodity trader Pierre Andurand remains bullish on cocoa futures. 

Andurand Capital Management remains "very convinced" in its "long cocoa thesis," noting in a recent letter to investors seen by Bloomberg that tight supplies and stronger-than-expected demand will continue boosting prices.