Cocoa futures are poised to benefit from the political disruptions in Ivory Coast, the globe's largest producer where the presidential election is in dispute, Bloomberg reports.
Alassane Ouattara is internationally recognized as the victor of the late November election, but Laurent Gbagbo has not ceded victory, and he asserts his competing claim as he was named the winner by Ivory Coast's Constitutional Council. Ouattara ordered cocoa shipments stop, in an effort to sever funding to Gbagbo.
"Exports are being cut back, so there is a lot of uncertainty," Walter Hellwig, who helps oversee $17 billion at BB&T Wealth Management in Alabama, told Bloomberg. "Anytime there is a disruption in supply, whether it is politically generated or weather related, prices will be pushed on the upside."
By cutting off exports, Ouattara might contribute to sending the price of cocoa to $3,720 per metric ton, according to a Bloomberg survey.
Shortly after 9 a.m. on Tuesday, cocoa futures were up 0.33 percent, a rise of $11 to $3,323 per metric ton.
"It is certain that the ban will lead to speculators taking longer positions and, as not many are interested in selling in these circumstances, prices will rise until the situation calms down," Javier Almela, the chief purchasing manager at Spanish cocoa buyer Natra, told the news service.
Risk Disclosure
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.
