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Cocoa Futures’ Fundamentals – Running in Circles

Posted 01/10/2019 7:26AM CT | Peter Mooses

Cocoa futures continue the same story; will the demand outlook brighten? Will supply be low? Is the weather premium already accounted for? These are the constant questions that carried us through the 2018 trading year.

As we trade in the new year, the techincals appear to be taking the lead. Overbought levels have been reached, causing a slight pullback. The March contract has traded between 2350 and 2425 – 2400 is a key level. A close and hold above 2400 should help traders see new highs this year.

Although most fundamentals appear bearish, prices have stayed strong. Weather premium may have already been put into the market. That being said El Nino events have been fairly calm, main growing areas have seen mild weather – do we have some downside ahead due to these factors?

March ’19 Daily Chart

Cocoa Mar '19 Daily Chart

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Peter Mooses

Senior Market Strategist
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.
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