Jul-23 NY cocoa found support midweek from above $3,010 to $3,000 but broke lower to settle May 26 at $2,991. Sep-23 NY cocoa broke support near $3,105 May 26, closing at $3,006. For both contracts, RSI and MACD remain neutral, while the stochastic is moderately bearish.
After its fresh contract high of £2,398 on May 19, Jul-23 London cocoa traded sideways the week of May 22 above support near $2,350, settling May 26 at £2,360. RSI is strongly bearish, MACD grew less bullish and the stochastic, though slightly bearish, is no longer showing an overbought signal.
The dollar rallied towards the end of May, settling May 25 at an 11-week high, and presumably pressuring prices of dollar-denominated cocoa. The pound, in turn, closed May 25 at a two-month low vs. the dollar.
Based on satellite analysis, a study in Nature Food found that cocoa is a driver of 37 percent of deforestation in Ivory Coast and 13 percent in Ghana. The report also found that the area under cultivation is underreported—perhaps by as much as 40 percent in Ghana. Ivory Coast and Ghana are estimated to have lost over 90 percent and 65 percent, respectively, of forest cover since 1950.
The full version of this commentary appeared on our IQ platform May 26, 2023. Further information, statistics, and pricing for the cocoa market are available to IQ subscribers. Learn more about becoming a subscriber.
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