Cocoa - Bean Issues and an Election Equal Volatility

by Peter Mooses
April 26, 2017 3:28PM CDT

There are four areas to monitor in cocoa over the next few weeks.

First, supply. Will we get numbers in line with estimates that have helped prices move lower? At this point, it is anyone’s guess after the latest news that West Africa could have some bean issues. The affect El Nino had on the crop is not completely known yet. If beans come in small or damaged, this will hurt export data. Ghana also needs to borrow around $400 million to get through the season, which could turn the supply side of the equation bullish if any issues surface.

Second, demand. With the recent move in the Euro currency, is Europe’s demand for cocoa making a comeback? Traders have been waiting for this answer but there hasn’t been any real carryover to prices.

Third, the French Election. This will affect the currencies and the overall market tone. We will know more after May 7…

Lastly, the technicals. The July contract is showing support around 1835, resistance at 1900. The contract couldn’t break and hold below 1800. The long liquidating may be coming to an end. Now what? 

Jul '17 Cocoa Daily Chart

 

Jul '17 Cocoa Daily Chart

Peter Mooses
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Peter Mooses

Senior Market Strategist

Follow Peter on Twitter @PMoosesRJO.

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.


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