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New Lows in Cocoa – Where is the Bottom?

Posted 08/07/2019 4:11PM CT | Peter Mooses

With global uncertainty, trade wars and volatile currencies – all commodities and stock sectors have had a rough week. Cocoa futures are no different. Cocoa futures’ prices are down again, 12 straight trading days. This market has formed one of the most bearish charts in commodities. Is this a good buying opportunity? Now, it is hard to tell, not only have the outside factors created this spiral lower, but cocoa fundamentals are weak too. Demand is a concern; volatile Asian markets are not helping this. Cocoa arrivals are leaning on the move lower as well. Uncertainty in cash prices in Ivory Coast and Ghana are also pressuring the cocoa market. As September options reach expiration and the September trades in its final weeks, look to see if the market holds above 2200. If it holds, buying opportunities in the December contract should form.

Cocoa Sep ’19 Daily Chart
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Peter Mooses

Senior Market Strategist
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.
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