Cocoa - Bean Issues and an Election Equal Volatility

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

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.