Coffee futures prices today - Cocoa Prices Forecast 2015-2016 : Cocoa futures prices rose Wednesday, August 19, 2015 : Cocoa futures rose on chart-based buying, defying the sharply lower trend seen in larger markets as the 19-commodity Thomson Reuters CoreCommodity Index fell to its lowest since 2002. Raw sugar consolidated lower after Tuesday's surprise rally.
New York cocoa firmed after closing above the 100-day moving average on Tuesday and then extended gains above a key Fibonacci retracement level. Concerns over dryness in parts of top grower Ivory Coast and No. 2 producer Ghana provided bullish sentiment, traders said.
New York December cocoa settled up $32, or 1 percent, at $3,116 a tonne, while London December cocoa closed up 23 pounds, or 1.1 percent, at 2,075 pounds.
Fundamentally, there are some good reasons for the market to support higher cocoa prices than historical levels. Over 60 per cent of cocoa production comes out of the Ivory Coast and Ghana in West Africa. In both countries, the trees are getting older. Clearly, if anything happens in that region, it can heavily impact prices. The average age of the cocoa bean trees is 15 to 20 years old. Many are past their maximum yielding timeframe. As such futures prices, over the longer term, should be higher.
London cocoa futures rose by more than 13 per cent in 2014 on expectations that production would fall in West Africa. Currently, however, there are no obvious signs that futures should be trading as high as they have been; consistently above USD2,900 a tonne over the last six months.
The International Cocoa Organisation (ICCO) last month revised estimates of a surplus to a global cocoa deficit of 17,000 tonnes in 2014/15. As a result, prices rallied 10.8 per cent in February although they have since fallen back to USD2,695 per tonne.
Asked whether cocoa presents a short selling opportunity over the near-term, Nicole Thomas, Commodity Analyst for McKeany-Flavell responds: “A 17,000 tonne deficit might sound like a lot but it really isn’t. As far as short selling opportunities go, in my humble opinion I would have to say it could be. It feels like futures are too high in relation to the fundamentals. To have maintained prices above USD3,000 per tonne over the last six months perplexes me because there is nothing out there that says the situation is that bad. However, I’d caution the short seller as due to the persistence of elevated futures, current levels may appeal to commercial users and add support to values.
“What would be a more reasonable level based on fundamentals would be a price of somewhere between USD2,400 and USD2,800 per tonne; similar prices to those seen in 2013.”
Indeed, from a demand side chocolate consumption has dropped off in Europe. As the Wall Street Journal reported on 22 March 2015, the ICCO expects demand in Europe and the Americas to fall 2 per cent in each region, with demand in Asia potentially falling by 4 per cent.
“Where you need growth is in less mature markets like Asia where demand has primarily been for cocoa powder – and you need that demand to lean more on the side of chocolate. That would help balance the profitability for cocoa products. The bigger story right now with cocoa is the amount of speculation in that market and the need to plant fresh trees in West Africa,” says Thomas. “It’s hard to justify today’s prices based on demand.”
New York cocoa firmed after closing above the 100-day moving average on Tuesday and then extended gains above a key Fibonacci retracement level. Concerns over dryness in parts of top grower Ivory Coast and No. 2 producer Ghana provided bullish sentiment, traders said.
New York December cocoa settled up $32, or 1 percent, at $3,116 a tonne, while London December cocoa closed up 23 pounds, or 1.1 percent, at 2,075 pounds.
Fundamentally, there are some good reasons for the market to support higher cocoa prices than historical levels. Over 60 per cent of cocoa production comes out of the Ivory Coast and Ghana in West Africa. In both countries, the trees are getting older. Clearly, if anything happens in that region, it can heavily impact prices. The average age of the cocoa bean trees is 15 to 20 years old. Many are past their maximum yielding timeframe. As such futures prices, over the longer term, should be higher.
London cocoa futures rose by more than 13 per cent in 2014 on expectations that production would fall in West Africa. Currently, however, there are no obvious signs that futures should be trading as high as they have been; consistently above USD2,900 a tonne over the last six months.
The International Cocoa Organisation (ICCO) last month revised estimates of a surplus to a global cocoa deficit of 17,000 tonnes in 2014/15. As a result, prices rallied 10.8 per cent in February although they have since fallen back to USD2,695 per tonne.
Asked whether cocoa presents a short selling opportunity over the near-term, Nicole Thomas, Commodity Analyst for McKeany-Flavell responds: “A 17,000 tonne deficit might sound like a lot but it really isn’t. As far as short selling opportunities go, in my humble opinion I would have to say it could be. It feels like futures are too high in relation to the fundamentals. To have maintained prices above USD3,000 per tonne over the last six months perplexes me because there is nothing out there that says the situation is that bad. However, I’d caution the short seller as due to the persistence of elevated futures, current levels may appeal to commercial users and add support to values.
“What would be a more reasonable level based on fundamentals would be a price of somewhere between USD2,400 and USD2,800 per tonne; similar prices to those seen in 2013.”
Indeed, from a demand side chocolate consumption has dropped off in Europe. As the Wall Street Journal reported on 22 March 2015, the ICCO expects demand in Europe and the Americas to fall 2 per cent in each region, with demand in Asia potentially falling by 4 per cent.
“Where you need growth is in less mature markets like Asia where demand has primarily been for cocoa powder – and you need that demand to lean more on the side of chocolate. That would help balance the profitability for cocoa products. The bigger story right now with cocoa is the amount of speculation in that market and the need to plant fresh trees in West Africa,” says Thomas. “It’s hard to justify today’s prices based on demand.”
Does the cocoa price take into account production in South America and Asia? Or is there a separate index for these?
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