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.

Cocoa Dec ’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.