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.