Cocoa prices in the December futures have pulled back, dropping below 2500 recently. Longer-term demand is strengthening is most areas of the world. Asian grinding data came in weaker than expected -bringing prices down to support levels but prices should recover in Q4. Weather is a big question for Ivory Coast. Will too much rain hurt production? Will there be enough cocoa to support the increase in demand for 2022? These factors all come into play while positioning the longer-term trade.
For the short-term, look at 2580 for near-term resistance. A pop above this should send prices back to 2650 on bullish news. For now, traders should continue to watching demand for key regions of the world – North America, Europe and Asia. Weather patterns in West Africa will also affect the trade. Trader’s should take a cautious approach for now as prices in Q4 for cocoa has been anyone’s guess the past few years as demand has been unpredictable.