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.