Looking at the May cocoa futures chart, you will see one of the most bullish commodities over the past two weeks. You can see that prices in the soft have rallied over ten percent. The contract is also testing 2400, a level many traders have been waiting for. Bullish supply and demand news have finally come together to give the market the boost it has been anticipating. Asian demand provided strong support. Chinese PMI came in stronger helping the cause. If demand can continue to strengthen in N. America and Europe we could see 2450 tested in the short-term.
Technically, a continued close above the 9-day moving average will prop prices up too at these levels. Fundamentally, there are some concerns on the crop in growing regions, West Africa mainly. If rainfalls don’t amount to much, these areas could see production drop as dry heat is expected. With the Brexit news in our rearview temporality, the currencies have also been able to support cocoa and other softs. Continue to monitor the technicals as overbought levels are reached, the reversal from a strong rally like this one could leave many longs hurting with support down at 2280.
Cocoa May ’19 Daily Chart