Cocoa Futures Meet Technical Resistance; Global Demand is Key Factor as Prices Continue Climb

Cocoa supply and demand battle
West Africa supply data is weak, helping support prices
Euro and Pound and stock market continue to add volatility to cocoa
Cocoa Futures Update

Cocoa Futures Update

Are cocoa futures headed back to 2600?

 

Cocoa Futures Meet Technical Resistance; Global Demand is Key Factor as Prices Continue Climb

Looking at the December cocoa chart, two stories are being told – a supply and demand battle, and technical levels are guiding prices. After the big sell-off from July to August the market erased that turn lower and now has cocoa testing a key resistance point, 2525. This mark has held a few times without ever allowing a large move higher. If the perfect equation can come together – technical data, global risk/currency trade, and supply/demand, prices may be able to trade and hold above 2600.

Currently, West Africa supply data is weak, helping support prices but the demand is not there for the soft. Europe and North American demand continue to be weak, somehow Asian demand have been able to brush off the ongoing trade issues.

The Euro and Pound, as well as weakness in the stock market, continue to add volatility to cocoa. The Dow and S & P have dropped this week, as low as the levels we saw in August, but a recovery appears to be forming. Look at all these outside factors as little pieces that could give us short-term guidance in cocoa.

A boost in demand is the key for the December contract to move hold above 2600 before contract expiration.

Cocoa Futures Trade Insights
Source: Tradingview

If you are interested in discussing the soft commodities further contact pmooses@rjofutures.com . 


 

 

 

About the Author

Peter Mooses is a commodity broker at RJO Futures. He enjoys the analytical aspects of futures trading and appreciates the economic impact that commodities have across all markets.