Medium term
Trade view / 02 June 2016 at 1:34 GMT

No rain means cocoa will break higher

Managing Partner / Spotlight Group
United Kingdom
Instrument: CCN6
Price target:
Market price:

There is a problem in the cocoa plantations in Ghana. They are in severe need of rainfall; all because of the sustained West African dryness which threatens both quality and production in Ivory Coast too, the International Cocoa Organization (ICCO) has warned.

The ICCO issued a new, gloomy upgrade late on Tuesday that increased by 67,000 tonnes, to 180,000 tonnes, its forecast for the world cocoa production deficit in 2016-17. It said that the revision was a reflection of a generally weaker harvest outlook for all of West Africa, which accounts for in excess of 70% of global output.

The extreme weather conditions are a direct result of the severe Harmattan wind in the West African region. When combined with the impact of El Niño, the impact has been negative for the 2015-16 harvests, the ICCO said.

In Ivory Coast, the Harmattan hot and dry wind blowing in from the Sahara is said to be one of the most aggressive in over 30 years.
Source:;  Spotlight Ideas. Create your own charts with SaxoTrader; click here to learn more.  

This is worth a speculative play from the long side.

 Source: Spotlight Ideas

Management and risk

Parameters: Cocoa July 2016 CCN6 USD/tonne.

Entry: Buy 3035.00 18:25 BST.

Targets: 3044 … 3052 … 3068 … 3085.

Stop: 2096.

Time horizon: Medium-term.

— Edited by Susan McDonald

Non-independent investment research disclaimer applies. Read more


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