Softs

Fed Tapering, Weak Demand, and Growing Supply – Cocoa Futures

Posted 11/04/2021 9:28AM CTPeter Mooses

December cocoa is attempting to find support. After the market found consolidation last week, it broke lower the past few sessions. Technically, the market broke support and moved to levels last seen in August. At that point on the chart, cocoa saw a decent rally – will the same happen now?

The fundamentals are similar – unknown demand for the rest of the year, will the recent weather affect production levels and will the global economy pressure commodities? Currently, there are a lot of unknowns.

Trader’s need to monitor the Fed tapering and how outside markets react. At the moment, this recent pullback could be a good buying opportunity for bulls looking to gain exposure. A not so far off target of 2600 is realistic in the near-term for December cocoa. Expect volatility as we approach contract expiration.

Cocoa 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.