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


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.