On the 16th, after European grind data came in bullish, reporting a number of 3.3% against an expected 1-3% rise – prices had a volatile day. After a move higher, the market sold off – overbought techinals pushed prices even lower. 2314 was touched, the lowest level reached after the recent rally. Since the ECA started recording data in 2000, this week’s first quarter level is the highest to start a year.

Asia reported grind data at 9.5%, well above the 3-5% range that traders were anticipating. Economic data in this part of world also remains supportive for a move higher in commodity prices, especially in cocoa.

Port arrivals in Ivory Coast continue to come in high and weather in the region remain bullish for prices. Lower rain falls, dryer weather have producers concerned about output levels. Ghana’s production levels may also come in down, as expectations are being lowered.

Technically speaking, overbought levels have been reached, but with the recent demand news, grinding numbers are very positive for prices to remain at these levels or higher. If the market can erase the loses put in on the 16th look for the chart to continue its path. Also, with continued cuts in production levels in West Africa, look for prices to test 2450 in the July contract.

Cocoa July ’19 Daily Chart

Cocoa July '19 Daily Chart

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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.