We mentioned to clients a few weeks ago that a heavy short position in the cocoa market, combined with potential “psychological concerns” over a developing El Nino, has probably meant a bottom was in for the cocoa market (at least for now).  Political unrest in west Africa combined with areas of dryness (red on map, below) in parts of Ivory Coast and Ghana are reasons for this short covering rally? Will this continue?  Subscribers to our newsletter will find out the answer in the months ahead (https://www.bestweatherinc.com/climatelligence/).

Political unrest in Ivory Coast is also helping this market, but usually a reaction in cocoa is over-done with regard to political issues.

In the meantime, heavy rains have hit parts of Nigeria and Cameroon, in which transportation has been stalled for days due to muddy roads.

Combine all of this factors, and we have seen nearly a 10% rally in cocoa the last couple weeks. The Key Point right now is, that it is probably a bit late to jump on board going long cocoa, until more is known about El Nino (or not) and what summer through winter weather will be.

Some weather issues for cocoa

RAINFALL (ABOVE) THE LAST MONTH IN WEST AFRICA—TOO DRY IN PARTS OF IVORY COAST AND GHANA NEEDS TO BE WATCHED. THIS IS NOT A BIG FACTOR IN LOWERING PRODUCTION YET, BUT HEAVY RAINS IN NIGERIA AND CAMEROON IS AFFECTING TRANSPORTATION OF BEANS

Moore Financial Cocoa Seasonal

Charts from Moore Financiallhttp://www.mrci.com/