Softs

Trade Deals, Brexit and Cocoa Futures

Posted 12/12/2019 11:49AM CTPeter Mooses

As of Thursday, cocoa futures were down for the fourth straight session. After the trade above 2600, traders took profit, causing some of this sell-off. As longs liquidated this week, traders are deciding whether to take the sideline before Brexit talks or reestablish positions. The markets should see volatility overnight. Demand has been growing stronger in cocoa. The technicals continue to give cocoa futures’ prices support as numbers have stayed above key moving averages. All this could change with the news coming overseas Thursday night. The euro and pound will be greatly affected by the coming news, which will carry over to cocoa.

To add to the current uncertainty in the markets, President Trump tweeted Thursday implying a trade deal was near, causing equities to rally. This would affect the Asian markets and the demand in cocoa from this part of the world. This “unknown” will have traders guessing which side of the market to take.

Conservative traders may look at buying options based on the direction they think the market will take. Others will take a wait and see approach.

The Friday trade should be an interesting one in cocoa futures, as well as all global markets.

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.