Although the May cocoa contract appears to have made the turn higher, it may be short-lived. After a few weeks of consolidation during the recent volatility, the May futures contract has turned higher trading above 2400. This move has followed a positive turn in the equities market. As the world continues to brace for more Coronavirus cases, the market feels as if small positive signs may be headed our way. Although no one knows how long these recent changes to everyone’s lifestyle will last, the health industry and government continue to make efforts to work together and make life safer again. Although we are far away from being “normal” again, small steps are needed to get there.

Cocoa does not have its own demand to help this move have any follow-through. There are many changes to deliveries and ports are closed causing the supply chain to be affected. Until there is more known about this virus, the softs and food markets will be trading off day to day news and updates.

Continue to monitor the market closely, if any breaking macro news occurs, it could send cocoa futures in either direction. But technically, the chart is showing traders cocoa wants to break out to the short-term highs we saw just a month ago.

Cocoa May ’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.