Abidjan, the capital of the nation that is the world's top producer of cocoa, is under the control of military forces loyal to Alassane Ouattara, the internationally recognized victor of the late November 2010 presidential election. Incumbent president Laurent Gbagbo, who refused to cede power to Ouattara and step down, was expected to call for a cease fire.
"The threat from Gbagbo is simmering down, so we're losing the risk premium on cocoa," Erica Rannestad, a commodity analyst at CPM Group in New York, told the news service. "People are expecting a resolution."
At 2 p.m. on Wednesday, cocoa futures were down 2.29 percent, a $70 reduction to $2,987 per metric ton.
The commodity has been used as a pawn and found itself in the dead-center of the political dispute. Ouattara cut taxes of the commodity to Gbagbo as a method of forcing him from office. Gbagbo attempted to force exporters to ship the commodity by the end of the month and was expected to confiscate the stockpiles of unshipped cocoa.
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.
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 trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.