Softs

Cocoa Heading Towards Year-Lows

Posted 06/21/2017 1:29PM CTPeter Mooses

European and North American demand continues to be monotone. Supply levels remain bearish, and weather has not had an effect on production – will El Nino change that? Cocoa’s story line this year is on repeat. Will demand give prices a boost? Will there be a large surplus in production? These thoughts and lack of fundamental news have forced the September contract down below 1850; heading towards year-lows put in back in May. Earlier this year, financial issues in key growing regions were affecting price levels, and new talks have reopened, possibly creating future volatility. If 1825 is tested, 1800 is in sight – buyers may be then tempted to re-establish positions. After five sessions of lower trading, COT data on June 23 may give us a better idea of what traders are thinking. Traders could look at buying calls in the December contract to gain exposure to the market if a recovery is building. 

 

Sep ’17 Cocoa Daily Chart

Sep '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.