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.

Cocoa Mar ’22 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.