July ’19 cocoa futures were pushed down rapidly in price due to negative Chinese trade talk and tariff tweets. Trump’s tweet on increasing tariffs in a fresh trade war assault has wiped away much of the global risk sentiment resulting in market sell offs, of which cocoa has fallen victim. Cocoa futures have experienced significant swings in price since those mid-April highs after a rally of fourteen straight sessions while the market tried to balance fluctuating demand and possible supply threats. The scale seems to have been tipped now in favor of the bears and demand tone has become a casualty in the trade war putting this crop’s price below its 100-day moving average. Volatility is quite likely through the next few sessions so it will be very important to focus on where prices close for the day. Potential is strong for continuing price drops on speculative selling while bears feast on negative headlines. Fear not though bulls; if supply threat based on poor growing conditions for the mid-crop come to light at the end of the tunnel, or a shift to successful trade talks with China hit the headlines there could be a rally worth waiting for.

Cocoa Jul ’19 Daily Chart

Cocoa Jul '19 Daily Chart

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Eric Scoles

Eric entered the workforce during the summer of 2007 as an apprentice tradesman just before the big crash and recession which followed. The impact of which strongly inspired his interest in the financial industry and began him as a student of the markets. Eric worked throughout the following years developing strong communication skills and risk management practices in the aviation and marketing industries before ultimately getting licensed and turning his passion into a career as a market strategist with RJO Futures.