Softs

Global Economic Slowdown Could Weaken Demand of Cocoa

Posted 03/13/2020 9:47AM CTPeter Mooses

As we continue volatility in every market, cocoa continues to move lower. As the May contract tests lows put in at the end of 2019, demand for chocolate could take front stage for cocoa futures. As the NBA, NHL, MLB and most other professional and minor league sports and teams postpone play until further notice due to the Coronavirus, cocoa could be one of the futures most affected. Since chocolate is a good indicator of cocoa demand and it’s sold at many entertainment venues, this suspension of play could affect futures’ prices.

Each trading day appears to be different as more news breaks daily on the virus. As traders try to position themselves in commodities, a close eye is needed. The fundamentals will control most markets in the near-future, the technicals will provide guidance on quieter trading days. Look to see if 2425 holds and if the cocoa and global markets can recover next week.

Cocoa May ’20 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.