May cocoa futures have had a positive week. Short-covering and re-establishing bulls have helped the market reach its highest levels of the month. As we end Q1, traders will continue to wait for an increase in demand expectations. The COT data released on Friday’s has recently showed heavy selling and declining open interest. Technically, 2280 will be some resistance – a break and hold above this number will be needed for a push back above 2300. As we enter April, we will start to focus on the roll to the July contract. Inverted levels have been close all week between the May-July cocoa contracts. The tightness in the spread may attract longs to roll earlier.

Demand appears to be on the rise globally. Bearish supply news seems to be already priced into the market. Currencies could also help support current levels. Brexit news can also move the cocoa market at any given moment if any votes/deals break.

Technically, a continued close above the 9-day moving average along with a nice trendline forming, leading prices higher – Q2 may start off strong for the cocoa market.

Cocoa May ’19 Daily Chart

Cocoa May '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.