Softs

Grinding Data and an Increased Demand

Posted 01/17/2020 7:40AM CTPeter Mooses

Grinding data this week has cocoa futures testing highs from 2018. The March contract reached 2729 on Thursday. Asian demand increased and provided market support – leading to more speculative buying. European eemand was also up, paired with a stronger Eurocurrency, helped the market continue this follow-through move higher. If the N. American grinding data after Thursday’s close is also strong, look for 2750 to be tested. The street is anticipating a weaker number than other regions though. If this is the case, the market could see pullback back to 2680. If traders are looking for a short-term play, buying puts could be the path to exposure.

Technically, the chart is poised for a move higher. The market continues to close above the 9-day moving average and continues to trade above the 200-day. Support is at 2680 if the market were to pullback if we reach overbought levels. Resistance remains at 2730, above that 2750.

If N. American grinding surprises, 2800 could be touched over the next week. If the data comes inline, look to the currencies and global/political news to guide the cocoa futures again – as well as any tension in West Africa.

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.