Softs

Quality vs Quantity is Pulling Cocoa

Posted 05/10/2017 3:15PM CTPeter Mooses

We continue to hear that cocoa production numbers are up from recent years causing the market to find a new, lower trading range – but now there are concerns about the quality of the crop. Black pod disease is being reported in southwestern Nigeria. Weather patterns have damaged key growing regions and output. Although there was an abundance of cocoa to start the year; weather, port shutdowns – bottlenecking at output areas and black pod are giving traders a new market to look at. In the past 3 trading days, July cocoa has comeback about 10%. The market had seen oversold levels and buyers attempted to find a bottom. 1775 held and the market is deciding what to do at 1950 now. There is resistance here so the market will need more fundamental bullish news to break and hold above this area. In the short-term, look at weather patterns, supply and demand data and Cocobod borrowing issues to guide the market.

 

Jul ’17 Cocoa Daily Chart

Jul '17 Cocoa Daily Chart

 

Peter Mooses

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.