Cocoa Lacks Direction Ahead of European Grind Report

January 12, 2018 9:32AM CST

The cocoa market has been trading with very little direction this week.  However, I am not too surprised as most people are waiting for the fourth quarter grind numbers to be released.  It is the grind numbers that usually give us a better idea of how much demand for the product has moved for the better or the worse.  We will get the first of such reports next week starting with the European grind.  The report is expected to show an increase of grindings by two to five percent.  The North American and Asian grinds are expected later next week as well.  Therefore, I imagine we will see a week of contract positioning ahead as any increase in demand should aid in higher cocoa prices next week.  In addition, as the trade does move to position their buys and sells in the market the technical numbers are going to be very important to everyone.  To the top side the market has some room to move to 1950 and 1965.  However, many will likely not be very impressed unless we can see a break above and settle above 2000 in the March contract.  On the opposite side of the coin, should cocoa prices falter we have some support at 1910, 1900, and finally the lows of the contract around 1862.  I would be surprised if we did fall, especially if grind numbers do show a decisive increase in demand. 

Cocoa Mar '18 Daily Chart

cocoa_mar18_daily_chart

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