ICE cocoa futures (COCOA) are down around 3% today as the market once again focuses on improving near-term physical availability and elevated inventories. Pressure on prices is being reinforced by strong cocoa arrivals at ports in Côte d’Ivoire and ICE-monitored inventories remaining at relatively high levels. This is easing concerns about immediate supply shortages ahead of the main crop harvest.

• Major processors are currently signaling sufficient cocoa availability in the global market, while chocolate manufacturers have rebuilt part of their inventories, reducing the urgency for spot purchases.
• Today’s decline may also partly reflect profit-taking following the earlier price rebound and a reduction in long positions by funds.
• Supply-side risks have not disappeared. The market continues to monitor crop diseases, excessive rainfall and plantation conditions across West Africa, particularly in Ghana and Côte d’Ivoire.

For now, investors appear to be placing greater emphasis on high inventories and the current availability of physical cocoa than on potential supply problems in the coming months. The contract has pulled back today toward the lower boundary of the ascending price channel. If the $5,700-$6,000 area fails to hold, this could trigger a bearish impulse toward $5,000 per tonne. The $6,050-$6,200 zone now represents an important resistance area.

Source: xStation5