Softs

Cocoa Recovers as Macroeconomic Data Continues Stronger Patter

Posted 02/11/2022 9:18AM CTPeter Mooses

Cocoa futures’ prices have recently rallied more than 10%. Recent global data is indicating that this trend higher may continue. As an individual commodity, the demand for cocoa is increasing. Key areas of the world for cocoa purchases – Europe and North America, have begun removing Covid restrictions which appears to be boosting the demand in chocolate. The equity markets in Europe and the U.S. have also been strengthening, although still very volatile.

Weather patterns in West Africa have been very dry due to high temperatures, causing some concern in production numbers which could help support prices to stay above 2800. Weather will be a key factor in prices for the short-term. If production is affected later this season, prices could touch new contract highs in the coming months.

Grinding data in the future will also be telling for the outlook of cocoa this year. For now, supply and demand are working together to move cocoa prices higher. Traders should monitor the 2850 level and consider buying calls in further out months if the bullish trend continues.

Cocoa May ’22 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.