Cocoa & the Cocoa -Coffee spread

As well as following closely Cocoa & Coffee I watch the spread diff between Cocoa & Coffee (this is not a recognised tradeable spread) which is charted simply to show the differential between these two markets. Here below i have charted + Coffee - Cocoa...in effect as the price of Cocoa outpaces/gains on Coffee the price differential on this chart will fall and vice- versa.
eg: + Coffee@ 208.00 Cts/lb - Cocoa@ 3040.00$/ton = -2832 ....Then Cocoa rises 10$ but let us say Coffee remains the same price and you get + KC @ 208.00 - CC @ 3050 = -2842 etc etc etc






Here is the inverse ie -Coffee + Cocoa where you can see that as the diff of Cocoa over coffee increases the price rises when expressed this way.






Have you ever seen a more simple example of an Andrews fork? There is no doubt or argument about the pivots and no reaction lines needed so I drew these simple forks from which you can draw the conclusion regarding the breakout after price finishes 'walking the line'.
Cocoa has underperformed Coffee in last months during Coffees meteoric rise. Forget the fundamentals all we need to know if that coffee has gone from 130 Cents/Lb to 215 Cents/Lb in about a year and Cocoa has fallen during the same period.
As my earlier post explained both the Cocoa futures and the above spread charts and other factors (plus the relationship between near and far months) all point to a significant break out for Cocoa and perhaps it comes at a time where the upside potential for coffee looks pretty limited. Technically it has run into some resistance at the 210.00 area.
Whereas the Cocoa chart below has some very exciting features plus an obvious bullish fork failure.
For more reading/background on recognised exchange traded spreads please read Joe Ross's book (available free as PDF on request)

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