Supply and demand news for cocoa has been positive of late. The fundamental side of the equation has been helping bullish traders at the halfway point of the quarter. Demand for chocolate has been higher during the holiday season. Grinding data has also provided support. The currencies have also helped the recent rally. The Euro’s correlation to cocoa has helped prices move back to prices we saw last month.
Current weather patterns in key growing regions are somewhat supportive for more production – but light rain and hot temperatures may keep data intact at current estimates. The next few weeks will be telling.
Technically, we are at a key point of resistance. After the recent rally, prices have failed to move above 2600 and hold. Friday’s trade showed a big pullback in prices as some trader’s appeared to take profits from the recent move. The COT data released later should be telling on where traders are positioning themselves.