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Cocoa Jumps as Unrest Continues in Top Producer Ivory Coast

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Cocoa
  • Cocoa Jumps as Unrest Continues in Top Producer Ivory Coast

Cocoa extended its biggest weekly gain in five years after talks between army commanders and mutinous soldiers in the world’s top producer Ivory Coast failed over the weekend.

The beans jumped as much as 4.4 percent in London as Ivory Coast’s military was said to have given soldiers an ultimatum on Sunday to drop their pay demands and end a revolt. Special forces will take action against the soldiers should the talks fail, a person familiar with the matter said.

There were reports of shooting early Monday at the main army barracks in Abidjan, the commercial capital, and the country’s second-biggest city of Bouake.

“There has been a slight pick-up in the price in the last few days and that may actually reflect people getting a bit nervous,” Edward George, head of research at Ecobank Transnational Inc., “Bouake is one of the centers of the cocoa trade so obviously people are worried.”

Cocoa for delivery in July rose 1.8 percent to 1,597 pounds ($2,065) a metric ton by 12:01 p.m. on ICE Futures Europe in London. Prices reached the highest since April 7, after rallying 7.4 percent last week, the biggest increase for the most-active contract since January 2012.

The unrest was sparked by an announcement from President Alassane Ouattara on Thursday that the government reached a compromise with troops who revolted earlier this year over unpaid bonuses. The nation last month revised its budget amid lower prices for cocoa, its main export, limiting its ability to pay soldiers.

Cocoa has fallen 27 percent in the past 12 months on expectations of bumper harvests in West Africa including record supplies from Ivory Coast. Money managers have held a net-bearish position in cocoa futures and options in New York since November though trimmed the wager last week. Any bullish news could prompt speculators to make purchases to cover their short positions, according to Marex Spectron Group.

“The dangerous thing is, there is a very big speculative short in New York and the situation in Ivory Coast — that’s a catalyst in the market to trigger short-covering,” Jonathan Parkman, the co-head of agriculture at Marex in London, said by phone. “It’s a political worry. Do I actually think it will restrict cocoa supplies? I seriously doubt that.”

All import and export operations at Ivory Coast’s biggest port in Abidjan are continuing as usual, spokesman Alexis Guie said by phone on Monday.

Soldiers have wounded civilians and blocked roads to the main border with Burkina Faso, while citizens opposed to the rebellion have organized protests across Ivory Coast. Special forces troops are moving toward Bouake in the center of the country, according to a person familiar with the matter, who asked not to be identified because he’s not authorized to speak about it.

Meanwhile, in Cameroon, another top producer, stevedores called off a strike on Sunday after 200 members downed tools on May 12, stalling exports of cocoa and coffee.

“The thing is that there is ample cocoa out there,” Ecobank’s George said. “We’ve got a very good supply coming in in Ghana, so it’s going to take something pretty spectacular to turn the market.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Crude oil

Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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