July ’19 Cocoa has seen solid gains since it’s breakout last week with strong potential to keep rising in price. Cocoa futures are experiencing an inside day currently and have some vulnerability to a pull-back, but technical indicators suggest the over-all trend may continue bullish and fundamentals should support this. While US/China trade talks have caused volatility on market confidence, demand seems to be resilient and may maintain despite recent tension. The supply side concerns of a deficit increase as Ghana’s cocoa regulator Chocobod is currently unable to meet sales commitments as “swollen shoot disease” has affected a larger amount of the crop than expected and The International Cocoa Organization has lowered their production forecast accordingly. First-quarter grindings have set a strong pace and are expected to follow through into the second and third quarters. If this pace remains and production continues to suffer we could see a sizeable deficit this season and this market may provide good opportunity for bulls.
Cocoa Jul ’19 Daily Chart