Softs

US Presidential Election Results, Covid-19 Cases Rise and Demand Concerns for Cocoa

Posted 11/13/2020 9:04AM CTPeter Mooses

The US markets started the week off with a positive tone, surging higher on Election results and a potential Covid-19 vaccine breakthrough from Pfizer. As indices moved higher, most commodities followed suit. This rally was short-lived due to the growing number of Coronavirus cases in the US and worldwide. Europe has implemented lockdowns; the US is rolling-back restrictions in certain areas due to the rise in positive tests – these changes will add volatility to all markets in the short-term. Until a vaccine is approved and available to the public, anticipate this pattern for months to come.

Cocoa is already dealing with demand issues, add in lockdowns in Europe and the closing of indoor dining in areas of the US, cocoa futures could see more downside. Demand for chocolate is critical this time of year – Hershey and Barry Callebaut may be seeing the fourth quarter a little more positive than anticipated which can help cocoa prices rise heading into 2021.

Weather patterns in West Africa could be causing concerns for production in that region. If this holds, support could be seen on the chart at these current levels.

Cocoa Mar ’20 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.