Looking at the December cocoa chart, there are two stories being told – a supply and demand battle, and technical levels guiding prices. After the big sell-off from July to August the market erased that turn lower and now has cocoa testing a key resistance point, 2525. This mark has held a few times without ever allowing a large move higher. If the perfect equation can come together – technical data, global risk/currency trade and supply/demand, prices may be able to trade and hold above 2600.

Currently, West Africa supply data is weak, helping support prices but the demand is not there for the soft. Europe and North American demand continues to be weak, somehow Asian demand has been able to brush off the ongoing trade issues. The Euro and Pound, as well as weakness in the stock market, continue to add volatility to cocoa. The Dow and S & P have dropped this week, as low as the levels we saw in August, but a recovery appears to be forming. Look at all these outside factors as little pieces that could give us short-term guidance in cocoa. A boost in demand is the key for the December contract to move hold above 2600 before contract expiration.

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.