Sweet Mix of Prices for Cocoa Futures ahead of Holiday Season

November 29, 2016 11:46AM CST

Cocoa futures prices are in a sweet mix heading into the holiday season, when consumption of the product is at its highest.

The December contract in cocoa futures was down .66 percent at 2,403 in Tuesday commodities futures trading, while the March contract bubbled up .21 percent at 2,407.

Cocoa prices had a spike bottom at 2,358 on November 17th, and analysts say prices are now in a three-week consolidation mode, looking at possibly bottoming out heading into the strong-demand season of Christmas. Participants in the softs sector of commodities futures markets caution to keep watch on the cocoa futures market and wait for a four-week high to develop.

Other factors affecting the price of cocoa futures include ideas of bigger production in West Africa and reports of weaker cash market prices. Demand has dwindled recently, especially in Europe, which is prevalent in somewhat insubstantial grind data in the last several quarters. The market is trading the new crop, and the harvest is underway. Purchases from Ghana have been positive so far, but Ivory Coast arrivals are not as strong as expected. However, the weather in West Africa has featured a lot of rain, and production should be stronger. Production from the region has been high appears to be escalating. Meanwhile, growing conditions in just about all major production areas have been better than in the previous year.

Commodities futures markets analysts say to expect mostly dry conditions in West Africa with temperatures near to above normal. Malaysia and Indonesia should see scattered showers in all areas with temperatures near normal, while Brazil will get mostly dry conditions or light showers and near to above normal temperatures.

In economic news of relevance to the commodities futures markets, the third-quarter GDP second estimate data was reported to be 3.2 percent, compared to a widely-expected 2.9 percent. The deflator portion of the report was released at 1.4 percent compared to estimates of 1.5 percent.

November’s Consumer Confidence report came in at 107.1, according to the Conference Board, far above expectations of a reading of 101 and the highest since July of 2007.

The other data released on Tuesday, the Case-Shiller Housing Index, showed home prices 5.5 percent higher than September of 2015, up from the 5.1 percent annual gain in August. The index has now surpassed its previous peak of July 2006. 

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