Although we turned the calendar to a new year, most of our market stories remain the same. How will Covid restrictions affect supply and demand? How are the global markets and political unrest going to affect commodity and currency prices?

Two weeks into the new year and the March cocoa contract has found a range to trade in. On the chart, after a short sell-off, prices have consolidated. The market seems to like cocoa prices between 2450-2550 for now.

As the European and US stock markets move higher and continue to act like any news is good news – cocoa hasn’t been able to find its direction. Demand continues to be weak for cocoa and production remains strong. Volatility in the currencies, mainly Pound, Euro and Dollar, have added stress to an already uncertain market.

Once restrictions are eased and more openings occur, cocoa prices should head back to 2800. Traders should consider buying calls in further out months.

Cocoa Mar ’21 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.