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No New News Leads to More Uncertainty in Cocoa

Posted 05/23/2018 1:20PM CT | Peter Mooses

July cocoa futures continue to make lower lows – no fresh news has led to a bearish market. Long-liquidation, production uncertainty and a quite demand tone has the front month trading near 2600. Will production data be stronger than expected from West Africa? That question has weakened the market. Will the weather also help these numbers move higher? Will grinding data come in-line with expectations around 1.5-2%? The cocoa market has created more questions than answers over the past week. To add to the confusing equation, demand in cocoa has been lacking, but suddenly traders may see a boost – this will be dependent on the currency trade as well as corporate news – Barry Callebaut plans on expanding some locations which could mean demand is anticipated to grow. Technically, the market is weak and a break lower, around 2500 is realistic looking at the July chart. The market will take a wait and see approach until traders can obtain some solid fundamental news.

Cocoa Jul ’18 Daily Chart

Cocoa Jul '18 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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