Sanctions imposed on the Ivory Coast by the European Union initially caused prices for cocoa, sugar and coffee to rise, Bloomberg reports.
Vessels registered in the European Union are prohibited from taking on new financial acquisitions in Abidjan and San Pedro, two of the West African nation's primary ports for cocoa commerce, due to sanctions begun last week.
"This political development is perking up the market," Hector Galvan, a senior trading adviser at RJO Futures in Chicago, told Bloomberg.
Shortly after 11 a.m., coffee futures were up 0.6 percent, a $1.40 increase to $236 per pound. Sugar futures were up 0.71 percent, a 0.22 cent increase to $31.11 per pound. Cocoa increased 0.15 percent, a $3 increase to 2,008 per metric ton.
The disciplinary action was taken because the EU considers the government led by Laurent Gbagbo to be illegitimate and commerce, trading and exchanging the commodity helps fund that government. Gbagbo refused to step down after losing a national election to rival Allassane Ouattara.
Javier Almela, Spanish cocoa buyer Natra's chief purchasing manager, told Bloomberg that the soft commodity was now in backwardation as a result of traders' supply concerns.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.