Cocoa futures’ prices continue to trade in a higher, consolidated range. Macro data of late has provided support in cocoa futures. The CPI numbers came in supportive, under expectations. Inflation indicators will be an important place to look moving forward for a lot of the softs. The Fed has signaled that more hikes are coming in 2023 to combat inflation. This has created a volatile and weaker equity market.
Cocoa’s COT Friday should give us a little hint on where trader’s heads are as we end the year. Grinding data will also be telling on the supply and demand side of the equation. Demand appears to be on the rise for cocoa which will add support to our current price levels. Looking at a chart, 2560 needs to be broken to take the next step higher.
Weather premium will also help guide prices – hotter, dryer temps will move prices closer to 2600. If production comes inline with expectations, demand can continue to grow and the global economy can continue to fight off inflation, cocoa will be a commodity to watch in 2023. Prices during 2022 were attractive to buyers but there was a lot of unknowns that kept traders quiet or on the sidelines. As we know more in Q1 next year, we should see many soft commodities find their footing and continue to see higher prices.
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