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Range Bound Cocoa Futures Looking for Breakout

Posted 11/08/2017 1:44PM CT | Peter Mooses

December cocoa futures broke above 2200 – finally trading out of the range we have seen since April of this year. Demand seems to be on the rise as we enter the holiday season. Supply concerns will begin to move the March futures contract higher. Three big moves higher this week have given traders reason to believe the bull cocoa market may be coming back slowly. The recent moves in the Euro and Pound also support this thought process. As the weather in West Africa gets dryer, look for production numbers to move lower – causing prices to move and hold above 2200. If this new trading range of 2100-2200 can hold, and buyers continue to enter the market look for cocoa futures to end the year around 2300. The 50-day and 200-day moving averages have been broken, another bullish indicator these new ranges may be here to stay. Over the next few weeks, look to see if traders move their long positions into the March and May contracts as next year’s crop production numbers continue to come in lower than expected. 

 

Dec ’17 Cocoa Daily Chart

Dec '17 Cocoa Daily Chart

Mar ’18 Cocoa Daily Chart

Mar '18 Cocoa 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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