The battles in Ivory Coast over the lack of paid bonuses between regular army mutineers and Special Forces may have subsided, but the fear of further conflict is still spelled out in the cocoa market. Since the end of their Civil War in 2011, the current administration has enjoyed a relaxed atmosphere in which the largest worry is making sure they are consistent with the cocoa crops. However, this “Era of Good Feelings” that they have enjoyed was not more than window dressing over the fact that most of the nation is not happy with the government’s progress in making it a better place for all classes. Cocoa finished the day yesterday at 2086, up about 32 points. This is after the cease of hostilities came three days ago. I have covered the Ivory Coast and cocoa for many years, and understand the market’s unwillingness to let down its guard. Money will only serve as a Band-Aid to a wound that continues to fester. The price of cocoa will likely need to return to 2300 to 2500 to aid the working class stay feed. Therefore, I continue to suggest that in the near term investors look for long term buying strategies that they can take advantage of in a market that has many surprises in its future. Long options have a great way of keeping ones risk defined and one in the market for a great deal of time. Furthermore, near term support and resistance come in at (2090 – 2155) and (1958-1996).
Jul ’17 Cocoa Daily Chart