Cocoa futures continue to be demand driven. This time of year, typically we see a boost in chocolate sales for the Valentine’s Day holiday, this year is a little different. With less people going out due to restrictions and restaurants and stores reopening slowly, chocolate sales are down. The May chart continues to trade in consolidation due to these factors.

Thursday, we saw a 9 % drop down at one point. I do believe a lot of it has to do with traders preparing for the roll. Cocoa is one of the commodities to watch this year since it has been heavily affected by the lockdowns. Loosening restrictions and more activities opening can only help prices move higher. If the trend continues, traders will continue to want to be long, so shorts probably will look to exit positions as the year progresses. We saw a dramatic sell-off due to repositioning from the March contract to further out months. Looking at options pricing it appears traders are looking to remain long cocoa contracts.

With weather patterns also creating a bullish sentiment, cocoa prices should head back above 2500 in the near-term.

Cocoa May ’21 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.