(This is an excerpt from an article I originally published on Seeking Alpha on May 10, 2017. Click here to read the entire piece.)
When I first identified a potential bottom for the iPath Bloomberg Cocoa SubTR ETN (NIB), I did not envision the volatile process that has since unfolded. I particularly did not anticipate writing about cocoa crops as much as I have (I have been focusing on other writings). This week, NIB appeared to confirm another bottoming pattern, so here I go again…
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Source: FreeStockCharts.com
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So what fundamentals might promise to make this bottom more sustainable? The most important news came from Mother Nature in Ivory Coast. According to an interview on Reuters on Monday:
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Given the market’s baseline expectation for surplus, a sharp spike in price on contrary news is not a surprise – especially given earlier news about GOOD rains in the Ivory Coast helped create the fresh all-time low for NIB. Since it seems a mid-crop shortfall is all but assured, cocoa prices should hold the current bottom for now.
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Cocoa growers are also working in the background to figure out how to support the market for this crop. According to Bloomberg late last month, the chairman of the International Cocoa Organization (ICCO) announced after an emergency meeting that cocoa-growing nations will “coordinate production strategies.” {snip}
Be careful out there!
Full disclosure: long NIB
(This is an excerpt from an article I originally published on Seeking Alpha on May 10, 2017. Click here to read the entire piece.)