RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The cocoa market closed on Thursday under 1900 leaving many in disappointment. A tough week for cocoa, as we came down and tested the contract lows for the month of March.  Many are now speculating that investors who took profits on the way down may be compelled to buy back in at today’s lower values. Granted, although news has been light, the idea that we still have many hurdles to get over before the next crop is counted in the spring is an important consideration.  Factors such as weather, infrastructure, or the final yields all will likely be up for debate as we price cocoa going into the New Year.   I would argue that it is of no consequence that officials in Ivory Coast believe there will be no shortfalls.  We still have to consider that cheap cocoa does not entice producers to spend money to lose money if prices remain the same.  I would urge the trade to consider the contract lows in March as a great risk point.  We would likely need to hear that demand has completely dried up in order to push the market lower.  Current resistance numbers stand at 1910, 1927, and 1948.   Support stands at 1860, 1850, and 1815.

Cocoa Mar ’18 Daily Chart

Hector Galvan