At the moment, everything is coming together for cocoa bulls. Production levels are coming in lower than expected in key areas of Ivory Coast and Ghana. Demand appears to be stronger for chocolate than anticipated. Chocolate companies reporting earnings this week have shown that demand should be higher heading into the end of the year. The last quarter of the year is important for cocoa since holiday purchasing is a good indicator of demand for the commodity. A standard economic idea, supply and demand move a market, is occurring here and now for cocoa futures.

Global currencies are also playing a roll in this recent rally, higher prices could lead to greater demand. Of late, pressure in the currencies could be seen as a concern that could carryover to the softs. Cocoa has proven the last week that its own fundamentals have been strong enough to hold off outside pressure though, even from the equity volatility.

Technically, key levels have been broken. There seems to be plenty of upside, realistically prices could be headed back to 2500 next week and we could see the mid-year highs be touched. Monday’s trade should be telling; will we see positive follow-through or profit taking as we head into week two of November?

WEBOE Daily Chart


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.

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.