Softs

2018 to Bring Bullish Market Back in Cocoa

Posted 12/22/2017 7:51AM CTPeter Mooses

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

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.