As we look at the July cocoa contract and prepare for the roll to September, futures continue to move lower – 2400 is being tested while 2200 is where the chart shows heavy support. Traders have moved out of the July options and will have first notice day in the futures on June 18. COT data released this past Friday showed very little change in long positions. Traders hanging on to longs still believe the supply concerns will take over the market long-term as very little fresh demand news has surfaced.
Currencies have been a big factor in the short-term direction of cocoa. A strong dollar has weakened cocoa prices but small rallies in the Euro and Pound have led to small recoveries.
If bullish traders decide to hold on to their long positons – look for September prices to rise as we approach first notice day in the July contracts. If long traders go to the sidelines around the 18th of June, look for 2200 to be a realistic target in cocoa prices while we await more global news to guide commodities.
Cocoa Sep ’18 Daily Chart