Softs

Support in Prices for Cocoa Futures

Posted 01/29/2021 8:37AM CTPeter Mooses

Although the current cocoa chart is a bit confusing, it has been in a wide rangebound trade since the start of 2021. That being said – look for March cocoa to trade between 2500-2600 in the short-term. Chocolate companies reported weaker earning in 2020 due to the pandemic, but if the vaccines can help individuals get back to a new normal, 2021 should see an increase in revenue. The macro-sentiment of late has been slowly moving in a positive direction as more is learned about the vaccination process. More reopening, less lockdowns will be supportive for the “foods” prices in commodities.

The currency markets and equity markets are also providing support to cocoa prices. Weather premium in key growing regions must be accounted for too. West Africa is experiencing their dry season and it appears that it may be even hotter than previous years in the coming days. That being said, heat could potentially hurt production numbers but boost prices. Grinding data for the coming year is expected to be fairly in-line with last. If we see consistent levels, prices will hold or move higher on any data that comes in more positive. For now, traders need to be patient and see how the first quarter plays out on the macro side of commodities.

Cocoa Mar ’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.