The cocoa futures market began 2019 on a down note. Global uncertainty, political issues, trade talks and volatility in the currencies and equities added pressure to the soft. With demand concerns looming and production numbers coming in off estimates – it appeared that cocoa would have an uneasy Q1.
So far in February, cocoa saw a bit of a turnaround. Unfortunately, the potential lack of demand in Europe has hurt prices of late. On pullbacks, it appears the bulls are still tempted to go long, but as resistance is hit, 2360, any small rally has failed. 2280 also appeared to be a level of resistance but was able to be broken. Support has stayed around 2240, attracting buyers at that level.
As we close out February next week and all traders focus on the May futures contract in cocoa, follow the technicals for guidance as the fundamentals have been repetitive. A stronger pound and euro versus the dollar is worth monitoring too, this indicator could show us if demand could increase in key regions that impact cocoa costs.
Cocoa May ’19 Daily Chart
If you would like to learn more about soft futures, please check out our free Fundamental of Softs Futures Guide.