Drought can reduce crop yields
There is a drought in West Africa. Will Cocoa prices rise?
From November to February, a dry season has been observed in Côte d'Ivoire, Ghana, Nigeria, Togo and Cameroon. These five African countries account for three quarters of the world's cocoa production. This year, the drought is stronger there than usual, which can damage crop yields. The US National Weather Service's Climate Prediction Center (CPC) forecasts a 90% chance of formation of the natural phenomenon El Niño in winter of 2018/19 and a 60% probability of its formation in spring of 2019. At the same time, the CPC expects the current El Niño to be weak. The last time it was formed in 2015-2016, and during that period of time, the price of beans exceeded $3000 per ton. It should be noted that currently there is no shortage of cocoa in the world, so the dynamics of quotations can strongly depend on the weather in West Africa.
On the daily timeframe, Cocoa: D1 is moving upward within a rising trend. The further price increase is possible in case of a reduction in crop yields in the countries of West Africa.
Summary of technical analysis
Position Buy
Buy stop Above 2300
Stop loss Below 2070
There is a drought in West Africa. Will Cocoa prices rise?
From November to February, a dry season has been observed in Côte d'Ivoire, Ghana, Nigeria, Togo and Cameroon. These five African countries account for three quarters of the world's cocoa production. This year, the drought is stronger there than usual, which can damage crop yields. The US National Weather Service's Climate Prediction Center (CPC) forecasts a 90% chance of formation of the natural phenomenon El Niño in winter of 2018/19 and a 60% probability of its formation in spring of 2019. At the same time, the CPC expects the current El Niño to be weak. The last time it was formed in 2015-2016, and during that period of time, the price of beans exceeded $3000 per ton. It should be noted that currently there is no shortage of cocoa in the world, so the dynamics of quotations can strongly depend on the weather in West Africa.
On the daily timeframe, Cocoa: D1 is moving upward within a rising trend. The further price increase is possible in case of a reduction in crop yields in the countries of West Africa.
- The Parabolic indicator gives a bullish signal.
- The Bollinger bands have narrowed, which indicates low volatility. The lower band is titled upward.
- The RSI indicator is above 50. It has formed a positive divergence.
- The MACD indicator gives a bullish signal.
Summary of technical analysis
Position Buy
Buy stop Above 2300
Stop loss Below 2070