Traders have been leaning on technical information to trade cocoa futures. With the recent leg up, March cocoa appears to be headed towards 2640. Key resistance levels have been broken, most recently, 2560. COT data shows a short position that may be weakening.
As for the fundamentals, there are a few developing stories that should boost cocoa prices higher in the coming months. Production issues in Ghana will support this current move higher. Ghana is well behind last year’s pace and it appears that things can only get worse. Milder weather in key growing regions have thrown off production numbers.
Grinding data is around the corner, next week we will get Europe’s numbers from the fourth quarter of 2021. This paired with current currency volatility will likely lead to cocoa prices edging higher.
For now, traders should continue to keep a close eye on the charts and wait for the fundamental stories to develop.