Cocoa Grindings and Coronavirus

April 24, 2020 06:35 AM
European grinding data came in higher than estimates
Cocoa demand will remain weak
Rangebound trading most days
Cocoa Futures Update

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Cocoa futures have some fundamental news this week that normally would be strong enough to move the contract. European grinding data came in higher than estimates, causing Wednesday’s trade to see the July contract in the green. Traders were thinking the range would 2-4% lower but the European data came in up .9%. Asia data also came in above estimates, bullish for futures, but the market didn’t react that surprised. North American data came in inline; all three of these should have had prices closer to 2400, instead the global uncertainty still has control of all markets.

Demand will remain weak in cocoa as most of the world remains in some form of a “lockdown” or restricted from the “norm.”

As the world continues to learn how to live in these times, commodities are trading off one main economic force, supply and demand. This seesaw is not giving the markets much to work with. Supply chains are obstructed, bullish prices, demand is lower, bearish prices – this equals rangebound trading sessions in cocoa most days.

July Cocoa Daily Chart

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. Peter utilizes market analysis and trends to help clients achieve a balance between risk and return, while always keeping their investment objectives top of mind. Follow Peter on Twitter @PMoosesRJO