Cocoa prices saw a move higher this week, with the May contract trading towards 2600. As Covid-19 vaccines continue to be distributed, cases numbers appear to be heading lower. If this pattern continues, look for more regions to lighten up restrictions; this should lead to economic growth. 

Cocoa specifically has been greatly affected by lockdowns. Chocolate companies continue to report weaker data during the pandemic, as consumers have shifted their income towards necessities. 

Looking at the currencies, a weaker British Pound and stronger Euro has had little effect on this week’s cocoa rally. Cocoa appears to be trading more off its own fundamental hope and less off of the macro picture, as we’ve seen weaker equities this week. 

Cocoa producing nations are deciding on whether they should come together to have more control of the supply side of the equation, but many are leery. This could cause issues on many levels, but mainly with their local governments. 

Technically, cocoa appears to be headed for 2700 in the May contract if vaccine rollouts continue to show that they’re helping the public. Next week will be telling for this soft: if equities continue to move lower and currencies continue their volatility, will cocoa continue its own trend higher?

May Cocoa Daily Chart

Source: Tradingview

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