On the chart, cocoa prices have entered a new range. After Monday’s rally, traders have seen two down days. Profit taking and volatility in the currencies have weakened the market. Strong supply and demand news had the September contract headed to 2600 – but now that target is in question. Will the weather front headed to key growing regions in Africa hurt or help prices? If the rain is followed by dry heat, longer term production could be affected. In the short-term, bullish traders should consider buying calls if they want exposure. The chart looked to be forming a bullish flag, but Wednesday’s close may be showing us that this market has another idea in mind. Look for opportunities to enter the market on pullbacks and keep key levels in site, 2510 for support, 2585 for resistance.

Cocoa Sep ’19 Daily Chart

Cocoa Sep '19 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.