Softs

Grinding Data, Global Trade and Technicals Lead Cocoa’s Downward Turn

Posted 01/24/2019 8:09AM CTPeter Mooses

With global trade tension across the globe affecting most commodities, cocoa has also found some weakness. Technically, the chart is turning bearish. The March contract found some support at 2240, but has the potential to break lower off the recent grinding data and weaker demand tone. If 2225 is broken, look for 2160 to be tested. The weaker Euro is also pressuring European demand. Traders are also looking to Ivory Coast arrivals for guidance. With the recent weather fronts in West Africa producing light rainfall, we could see production expectations move higher, also causing concerns for lower futures prices.

While traders continue to trade the March futures contract and position themselves to move into the May, look at upcoming arrival and production data for guidance. Traders will also need to monitor trade talks and the US government shut down which has pressured the markets.

Cocoa Mar ’19 Daily Chart

Cocoa Mar '19 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.