Softs

Cocoa Futures – Tricks and No Treats

Posted 10/02/2020 8:38AM CTPeter Mooses

Cocoa continues to show weakness, both fundamentally and technically. Demand for cocoa has been a concern for trader’s all year but as we enter “chocolate season” we see that even chocolate/candy purchases have been affected by Covid-19. With the majority of the U.S. putting restrictions and guidelines on Halloween festivities, chocolate companies are reporting a decline in purchases. If children aren’t going door-to-door to collect candy in most areas, what will earnings look like for Q4 for chocolate companies?

For a market that was already hurting for demand, this could push futures prices below 2400. The chart appears to be in correction territory, if 2480 is met and taken out, 2400 could be here before Halloween. 

Key growing regions are also on pace to have higher production numbers in the near-term, long-term however, Ivory Coast could have a decline in production for the 2021 season. Trader’s should monitor company earnings and ICCO estimates as we trade through the final quarter of the calendar year.

Cocoa Dec ’20 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.