RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

It has been a tough week for cocoa traders.  The market is crawling back after taking another dive from what I would argue is an important breakout point.  In speaking to some people I get the impression that many are at the point of giving up on the market.  However, I would preach patience to those who have given this market time.  There are no sure things in trading, but the way cocoa has been trading I would imagine that we may have another shot at trying to test its five month resistance level of 2100.  One catalyst that may improve the odds that we move back towards resistance is the continued news that the crop in Ivory Coast that usually starts in September may not get under way until October.  In addition, although it is expected to be a good crop it will be smaller than last year’s.  This is likely due to many farmers walking away from cocoa on its lack of appeal.  Its value has dropped off significantly from last year when we were trading around 2700.  In my opinion, the best road to take at the moment is looking at strategies that take advantage of a bounce back to 2100 and beyond.  

Dec ’17 Cocoa Daily Chart

Dec '17 Cocoa Daily Chart

Hector Galvan