After cocoa rallied to a contract high, the fundamentals have weakened prices. Trader’s saw a boost in prices due to an increase in demand after last quarter’s grinding numbers. Of late, the global markets have weighed on commodities. Concerns about the coronavirus have affected the equity and futures markets. Asian demand of the soft has come into play. If this virus affects exports in large grinding nations, Asia specifically, we can see prices continue to move lower.

Production will need to come in lower than expected to give cocoa prices support. Technically, 2680 is support but the market would need a few more down sessions to sit there. Demand and coronavirus will guide cocoa over the next week as more cases and the spread continues.

Cocoa Mar ’20 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.