Month-end rebound breaks 6-day losing streak 📈
Cocoa prices are rising today by over 6%, once again approaching the $10,000 level. Today’s gains are most likely a rebound after recent sharp declines and month-end rebalancing. Since May 20, prices fell as much as 20% from their highest to lowest levels, but these declines have now significantly eased. It is worth noting, however, that cocoa prices have increased by about 12% throughout May.
Volatility in the cocoa market is noticeably increasing. The recent declines were driven by reports of rainfall in West African countries, which could improve production prospects. However, these remain highly uncertain. Cocoa stocks continue to rise, nearing 2.2 million bags, an increase of nearly 1 million bags compared to the lowest levels in 20 years seen in January.
On the other hand, some positive long-term factors include:
- A continued drop in deliveries to ports in Ivory Coast. In the week ending May 25, deliveries were just 20,000 tons, compared to 32,000 tons a year earlier.
- Ghana is expected to produce less than the previously forecasted 650,000 tons in the 2024/25 season. Production in the next season remains uncertain.
COCOA (H4)
From a technical analysis perspective, it’s worth noting that cocoa is rebounding from the 61.8% retracement of the last upward wave, which supports the continuation of the upward trend. The price has also moved back above the rising trendline. Additionally, net positioning in cocoa has been increasing since mid-April, although it remains historically very low.
Source: xStation5
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