Weekly cocoa market review 10/19/2020 COCOA FUTURES (CONTINUOUS: CURRENT CONTRACT IN FRONT) ICEUS:CC1! Commodity-market-review Help us, by consulting our free daily magazines with color stock charts and weather maps, on our website https://www.commodity-market-review.com Blow up the view counters π!! Thanks π TECHNICAL ANALYSIS OF COCOA Last week, ICE U.S. cocoa futures closed lower at $2361 per ton, losing almost $400 from the peak reached in early September. The 2019/20 harvest is complete, and it is very good. Arrivals in Ivorian ports are 2.074 Mtonnes for the 2019/20 season, 4.2 percent lower than the record season of 2018/19. We are facing a worsening of the sanitary situation, particularly in Europe. Great Britain, Belgium, Germany, the Netherlands, Spain, Poland and the Czech Republic have announced new restrictions. These restrictions are often accompanied by the closure of bars and restaurants that are places where cocoa is consumed. Paris announced a curfew from 9pm to 6am in 9 major cities. The pandemic is also not disappearing in the United States as Halloween approaches at the end of the month, which is a crucial time of year for cocoa . ICE US and EU cocoa stocks are now at the same levels as the previous year at the same time. Cocoa prices have so far benefited from low stocks. Milling reports were released on Thursday for Europe and the USA. In Europe, grindings were down 4.7% to 345,730 tonnes from 362,940 in Q3 2019. For the current year we are at 1.033 million tonnes for 1.078 million tonnes in 2019, a decrease of 4.2%. Europe is the world's largest consumer of cocoa . In the USA grindings are down 4.02% in Q3 from 123,208 to 118,260 tonnes. In Asia, grindings were down 10.1% in Q3 to 202,665 tonnes. The Ivorian presidential election will take place at the end of the month on October 31. Tensions, resulting in about fifteen deaths are to be deplored, since President Ouattara decided to run for a third term, deemed unconstitutional by the opposition. The Ivorian crisis of 2010/11 is in the memory. The opposition has declared its withdrawal from the electoral process and called for "preventing the distribution and withdrawal of voter cards. Violence took place this weekend in Bongouanou, north of Abidjan, killing two people. Cars and stores were also set on fire, according to AFP . Ivory Coast is the world's largest producer of cocoa . In the United States, the situation regarding the U.S. support plan is increasingly uncertain, and the chances of a full pre-election agreement are low. The Republicans want to bring to the Senate vote on Wednesday a limited aid of 300 billion, and Nancy Pelosi sets Tuesday as the deadline for an agreement. The various twists and turns and sometimes contradictory rhetoric in the run-up to the American election suggest a likely increase in volatility on all markets. COCOA WEATHER IN WEST AFRICA Ivory Coast experienced above-normal rainfall in September and early October. Black pod disease is showing limited signs at present. This disease appears in the case of excessive rainfall. Last week, rains were above the five-year average in most cocoa-producing areas of Ivory Coast, with up to 50 mm of rainfall. Rainfall forecasts in Ivory Coast are expected to be above normal for the next 2 weeks. ICE US CERTIFIED COCOA STOCKS Cocoa stocks were down to 3559 thousand 60 kg bags compared to 3625 bags the previous week. Note that ICE US and EU cocoa stocks rose above the stocks of 2019 in the same period. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week up to 93.72, and has been trading in a 93/94 range for the past 2 weeks. The situation is very confusing regarding the U.S. stimulus package. Donald Trump has made many contradictory statements in recent weeks. On Wednesday, the Republicans will propose to the Senate vote a limited support plan of $300 billion. Nancy Pelosi, the Democratic Speaker of the House of Representatives has set an ultimatum for Tuesday for a pre-election stimulus. On the FED side, things will certainly remain frozen until the outcome of the American election. The FED has insisted on the need for a quick vote on a support plan, and assures that the key rates will remain permanently low. A low dollar is generally favorable for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT ( Commitments of Traders ) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the positions opened on Tuesday of the same week. It indicates the position of commercial operators (producers, commodity buyers, ...) but also non-commercial operators (speculators). The net positions of speculators in the futures markets are particularly interesting to observe. The speculative net position on the cocoa futures markets is down sharply this week, to 17.012 K instead of 28.106 K.