The globe's two largest cocoa-growing nations are projected to enjoy additional rainfall during the next 21 days, boosting the outlook for the countries' upcoming crop of the soft commodity, according to a weather service cited by Bloomberg.
The next two-to-three weeks in Ivory Coast and Ghana, respectively the world's biggest and second-biggest growers of cocoa, will range from 20 millimeters to 30 millimeters, Marcus weather states. Those figures are equal to 60-to-80percent of normal levels of rainfall in the West African nations.
The soft commodity's follow-up crop is slated to begin in October but both nations suffered from increased dryness last month and earlier this month, which posed a danger to the development of cocoa plants in many growing regions within both countries.
"In the past 24 hours, there have been some showers falling over Ivory Coast and Ghana," founder Kevin Marcus with the weather agency told the news service on Wednesday. "The outlook is still for below-average rainfall, but with a gradual increase in rain activity over the next two to three weeks."
At 2 p.m. on Wednesday, cocoa futures fell 2.18 percent, a $53 loss to $2,380 per metric ton.
Regional rain reduced
The Soubre region in the southwest of Ivory Coast typically generates toughly 300,000 metric tons of cocoa per year. But during the first 10 days of this month the region was sprinkled with less-than-average amounts of rain, according to data provided by the National Meteorological Service, cited by Bloomberg.
Shifting east, the largest-growing region of Ghana had 4.5 millimeters of rain during the first 10 days of the month in three towns in the nation's western region, which is the country's biggest growing area, according to data supplied by the Ghana Meteorological Agency. During the same period 12 months ago, that region endured 35.4 millimeters of rain.
July and August typically are drier in West Africa, Marcus told the news source. The southwest region of Ivory Coast saw the dryness begin earlier than usual this year and the outlook for cocoa crops from 2012 to 2013 hinges on September and October rainfall amounts.
Marcus said the return of rain will do its part to stave off a "significant decline" to returning rain.
Figures from Ghana
The amount of acquisitions of the soft commodity that were declared to the Ghana authority was 30,442 metric tons since the light crop began early last month through this past August 9, according to Reuters.
The industry regulator indicated those purchases from the globe's second-largest grower of cocoa were more than 30 percent lower than the same period last year. During the first four weeks of the season last year, 43,841 metric tons were grown.
For week ending August 9 of this year, total purchases amounted to 3,631 metric tons, which falls short of the 4,447 metric tons during the same period of 2011, according to the regulator.
This year's forecast for Ghana
The forecast for this year's July-to-September light-crop production in Ghana will drop 60 percent to 42,000 metric tons, according to regulator. Those losses are attributable to weather conditions that are unfavorable to the crop.
Last year's crop set a record harvest when producing 107,000 metric tons of the soft commodity.
The nation conducts two cocoa cycles per year. The major harvest from October to May primarily is exported while local processors acquire the light crop from July to September at a discount.
The 2012-2013 harvest in Ivory Coast is set to open on October 1 yet with some changes, according to Agra Net.
The sector is seeing significant reforms that push to assure farmers have a minimum price.
That follows more than 10 years of harvesting that was not regulated.
Learn Futures Technical Analysis with The Market's Spine
Give Your Trading the Backbone it Needs to Succeed, The Market’s Spine is a 34-page futures technical analysis guide that details how to read the backbone of recent market activity, explains a handful of indicators that are well known to institutional and fund traders, and more. Expand your futures technical analysis knowledge here.
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.