2018 to Bring Bullish Market Back in Cocoa

December 22, 2017 7:51AM CST

Early December trading brought a drop in March cocoa prices. Since then, the market has consolidated due to the lack of supply or demand news support. Traders have taken short-term positions during the last month of the calendar year as we await more long-term outlook news from key producing regions.

As we head into 2018, stronger demand appears to be headed into the cocoa market. Specifically, European demand is set to increase. The euro and pound are also providing support in this region. West African production levels should be down in 2018. Weather premium will be added to the market. Damaged cocoa trees due to age and La Nina will also help boost prices due to lower output.

Before the market can go up, look for some liquidating going into the holidays as traders head to the sidelines. As far as 2018, prices should head back up to the 2300-2400 range if cocoa beans are potentially damaged as anticipated.

Cocoa Mar '18 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.