Cocoa futures continue to show weakness, both fundamentally and technically. Traders have been concerned about demand for cocoa all year but as we enter “chocolate season” we see that even chocolate/candy purchases have been affected by Covid-19. With the majority of the U.S. putting restrictions and guidelines on Halloween festivities, chocolate companies are reporting a decline in purchases. If children aren’t going door-to-door to collect candy in most areas, what will earnings look like for Q4 for chocolate companies?

For a market that was already hurting for demand, this could push futures prices below 2400. The chart appears to be in correction territory, if 2480 is met and taken out, 2400 could be here before Halloween. 

Key growing regions are also on pace to have higher production numbers in the near-term, long-term however, Ivory Coast could have a decline in production for the 2021 season. Trader’s should monitor company earnings and the International Cocoa Association estimates as we trade through the final quarter of the calendar year.

Source: Tradingview

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