Trade wars, global tension and volatility in the currencies all lead to consolidation in many commodities. Traders are seeing the world news carryover first hand in cocoa futures. Supply concerns in cocoa should be providing support but it hasn’t been strong enough to add any follow-through on moves higher over the past few trading weeks. Traders won’t get a good read on Africa’s production for a few weeks – expectations are showing the 18/19 data could help futures’ prices grow. But it does appear that Ivory Coast and Ghana numbers should provide support to the market, especially into the December and March cocoa contracts. There are also reports of pod disease and mold issues in key areas of Africa. This time of year these issues could lead to short-term rallies and adjustments in production levels. Bullish traders should continue to wait on the global volatility and monitor movement in the British Pound. In the meantime, pricing out puts could give traders a short-term view of where prices are headed and exposure if the cocoa market moves lower.

Cocoa Dec ’18 Daily Chart

Cocoa Dec '18 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.