Commodities Markets - Cocoa Prices

Cocoa futures have been grinding steadily higher in recent weeks, largely driven by speculation that the political situation in Africa’s Ivory Coast will cause supply disruptions to the world cocoa market. The Ivory Coast region is the largest exporter of raw cocoa by far, and a contested election has brought calls from neighboring countries for forced removal of the current regime if necessary.

This fundamental backdrop to the market shows up in the strong buying action seen at all near term technical support levels on the Cocoa chart. Over a longer timeframe, the action has formed into a large Ascending Triangle chart pattern, illustrated here by Autochartist on a 240-minute candlestick chart.

The most recent selling pressure in the market came after a minor breach of the pivotal $3,000 a ton level, and found quick buying ahead of the holiday weekend to close near the upper end of the triangle.

Traders are likely to be watching how the market behaves if the fresh buying extends into the new year, with a close above $3,100 signaling a breakout of the Ascending Triangle chart pattern and a possible run towards contract highs near $3,400 per ton.

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