Range Bound Cocoa Futures Looking for Breakout

November 8, 2017 1:44PM CST

December cocoa futures broke above 2200 – finally trading out of the range we have seen since April of this year. Demand seems to be on the rise as we enter the holiday season. Supply concerns will begin to move the March futures contract higher. Three big moves higher this week have given traders reason to believe the bull cocoa market may be coming back slowly. The recent moves in the Euro and Pound also support this thought process. As the weather in West Africa gets dryer, look for production numbers to move lower – causing prices to move and hold above 2200. If this new trading range of 2100-2200 can hold, and buyers continue to enter the market look for cocoa futures to end the year around 2300. The 50-day and 200-day moving averages have been broken, another bullish indicator these new ranges may be here to stay. Over the next few weeks, look to see if traders move their long positions into the March and May contracts as next year’s crop production numbers continue to come in lower than expected. 

 

Dec '17 Cocoa Daily Chart

Dec '17 Cocoa Daily Chart

Mar '18 Cocoa Daily Chart

Mar '18 Cocoa Daily Chart

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

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.