Cocoa continues its recent downtrend, and this trend was accelerated after Chairman Powell announced a rate hike would come sooner than expected for the US. All markets appeared to take a hit after this announcement. Many agriculture markets were hit the hardest.

Cocoa futures dropped to test the lows put in early this year. The weakened Euro and Pound versus the Dollar hurt the potential of a short-term recovery in the demand for cocoa. Although vaccinations continue and restrictions are lifted, the demand for chocolate has not returned strong enough. Grinding data will continue to be critical.

Weather is also bearish in Ivory Coast. Rains have moved in and have helped the crops which may produced higher output.

Continue to anticipate a stronger global recovery as we head into Q3. If that occurs, look for cocoa prices to head back to 2500. For now, the day to day trade will continue to be volatile and based on macro data.

Cocoa Sep ’21 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.