Softs

Slower Recovery Than Expected in Cocoa

Posted 05/07/2021 8:22AM CTPeter Mooses

Cocoa futures hit a 6-month low this week as weakness in demand continues. Outside markets and possible supply issues stopped that dip from becoming any worse. The Euro also made a nice recovery helping support cocoa prices in the short-term. Cocoa’s chart is still looking to find real direction, but this may take months to occur. Look for volatility through the spring and summer months as areas of the world continue to ease their Covid restrictions.

If the vaccine process continues at the pace it’s been at, many chocolate companies are hoping for positive purchasing data heading into Q3 when these companies can usually capitalize on the holiday season approaching October through year end. Halloween chocolate sales are a good indictor of where the US is at with consumption outside the pandemic. In the meantime, continue to look for the macro data to guide traders, followed by the currencies correlated to cocoa – until demand can really recover, prices are set to trade in the 2400-2500 range.

Cocoa Jul ’21 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.