Softs

Covid-19 Lockdowns, Lack of Demand, Plus Election Moves Cocoa Lower

Posted 10/30/2020 8:59AM CTPeter Mooses

Looking at a December cocoa contract, traders see the gap formed earlier this week – will that be filled? As we approach the weekend, Ivory Coast’s Presidential election is set to take place. Many people are anticipating political unrest and potential boycotts. As this occurs and supply issues arise from port closure or disruptions, prices continue to move lower.

The eurocurrency remains weak as lockdowns take affect in certain regions. Relief doesn’t appear close to an already demand dependent cocoa market. As new measures are put into place in Europe, demand continues to weaken as we head into a key time of year for the cocoa market. Typically, data from corporations show a boost in demand over he next few months, not during a pandemic though.

The U.S. Presidential election has the global markets on edge, waiting for the results next week will be sure to add movement commodities. Fundamentals will vary from day to day over the next week, but technical levels may hold, look at option strategies to gain limited exposure to the market during an uncertain time.

Cocoa dec ’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.