Traders looking to go long in cocoa futures have patiently been waiting for demand to strengthen before they re-enter the market, but it appears that this recent drop in prices may be enough to create demand in cocoa instead. 1890 held as the floor, now cocoa futures have rallied heading into the holiday weekend. With little fundamental change in the news, an expected record high in production from the Ivory Coast could mean this rally will be short-lived. Traders will have to look to the technicals to position themselves in the short-term. Oversold levels have been reached - some think a key reversal was hit and this price point could catapult us back above 2300. Until we know more about what pods are looking like and if production levels are as high as estimated, many traders will take a cautious approach with their entry points or stay sidelined entirely.
May'17 Cocoa Daily Chart
Source: WEB OE
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Senior Market Strategist
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Peter's interest in trading began during a college internship with Bunge North America on the floor of the Chicago Board of Trade, where he assisted commodities traders and performed market research and analysis. Upon earning a B.A. in economics from the University of Iowa, Peter served as an analyst, transaction manager and team lead in the Global Trust Divisions for LaSalle Bank and Bank of America, where he managed transaction activity in multi-million dollar client fixed income and asset-backed securities portfolios.
After years in the banking industry, it became apparent that Peter's real passion lies in futures trading. He joined RJO Futures because he enjoys the analytical aspects of futures trading and appreciates the economic impact that commodities have across all markets. Peter believes in utilizing market analysis and trends to help clients achieve balance between risk and return, while always keeping their investment objectives top of mind.