July cocoa continues to move lower the past few sessions. Traders have experienced a choppy few weeks of trading after a small “V” in the chart. Demand is slightly on the rise as more easing occurs in the U.K. and the U.S. As more vaccinations are administered, there appears to be an increase in demand for many commodities. Cocoa in particular, should see a rise in prices, especially later in the year as we head into Q3. Inflation is also a huge question for the U.S., this will have an impact on commodities and how they react to their natural day-to-day fundamentals.

For now, continue to monitor the Pound and Euro and see the correlation work its way into the cocoa market. Weather premium is also something to watch in the near term, mainly the lower than normal dry spell in West Africa. There is already a robust supply from last year and with a weak demand tone, prices may move a little lower before we see the real recovery take place.

Cocoa Jul ’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.