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

Cocoa Sep '18 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.