Cocoa continues to possess a long-term bullish supply/demand outlook, however, the court ordering of the liquidation of top exporter, SAF- Cacao, has undermined prices. The firm may have as many as 50,000 tons of unsold cocoa beans, which would need to be sold in order to offset debt despite being of poor quality. Purchase orders for Ivory Coast mid-crop have slowed in recent weeks due to the poor quality as well as the small size of the beans. Recent weather in West Africa provides optimism for the upcoming main crop season, however, a potential El Nino event later in the year could provide difficulty in matching this season’s production. The market is oversold, however, look for further downside action until the SAF-Cacao situation is resolved.

Cocoa Sep ’18 Daily Chart