Softs

Confused Cocoa Futures

Posted 06/04/2021 9:08AM CTPeter Mooses

Looking at a July cocoa chart, you can see the lack of direction. After a recovery in May, most of the rally has been given back. Recent consolidation has traders confused on cocoa’s next move. Certain areas of the world are anticipating an increase in demand as covid restrictions lift, others are left with the possibility of restrictions being tightened again. Most of this depends on the availability of vaccines in parts of the world.

Cocoa supply doesn’t appear to be a problem. Exports are ahead of last season. Weather could become an issue – with little rain expected and high temperatures, mid-crop could be negatively affected. The currencies may also help cocoa find support at these levels.

As we reach oversold levels, we’ll see what the COT data shoes us as well this week. Look for support to hold at 2385, if this occurs a bottom may have been reached.

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.