September cocoa continues to move higher. Traders are rolling or reestablishing their positions from July to September in the futures market. Although we are reaching overbought levels, fundamentally and technically, we could see the market move higher. Cocoa has closed higher the past week, making new highs. We haven’t seen these levels since about a year ago. At these levels, traders may consider taking profits and lightening up on long positions. Fundamentally, key areas – mainly North America and Asia, have had a strengthening demand outlook, which is positive for prices to move higher. If demand can hold, this factor mixed with the July to September roll should help the futures contract push towards 2600. If key producers continue to help the bulls on the supply side of the equation, this key level of resistance is realistic in the near-term trade. Although supply and demand are currently supportive for prices to stay at these levels, global uncertainty stemming from the equity markets could cause pullbacks. These pullbacks may create attractive buying opportunities for traders who have staying power. With little support at these points, mixed with an uneasy global tone, traders should remain cautious. Look for the COT report Friday to give some feel for how traders are positioning themselves as well.

Cocoa Sep ’19 Daily Chart

Cocoa Sep '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.