September has been a good trading month thus far for the bulls in cocoa. December cocoa moved to a multiyear high, but technically stalled around 2720 making that new resistance. Recent findings out of Ivory Coast’s production data shows that there will be a continued decline in supply. This is also being found in other key growing areas in West Africa. Lower production expectations mixed with stronger short-term demand has led to the recent rally in prices.

If restrictions begin to ease and Q4 data is stronger than the first ¾ of the year look for prices to continue to move in this direction. For now, weather appears to be a nonfactor in the soft and this market is mainly being driven by global supply and demand. Traders should continue to follow the technicals on pullback for entry and exit points but keep an ear on any changes to demand.

Cocoa 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.