It appears the lows may have been put in the December cocoa futures contracts. Although the contract has hit overbought levels, the technicals and fundamentals are working together to get prices back to 2500.
The grain market giveth and the market taketh, that was the theme in yesterday’s trade. Profit-taking coupled with a retreat in oil prices led to weakness in yesterday’s session.
Corn futures sprang higher yesterday on the headlines around the energy sector spiking oil prices which trickles down into strength in ethanol and corn.
The market managed to rally in the back half of the week, following a “blah” USDA report. We view the inability to break the market on a bearish report as a big positive.
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We got two new headlines last night, one that said the U.S. would delay the increase in tariffs until October 15th. The other was that Taiwan would step in and buy 3.6 billion dollars in American agricultural products.
December cocoa futures are attempting to rally but technically 2300 continues to be a level of resistance. Today’s close, above the 9-day moving average, should trigger follow-through on this recent move higher.
Grain trader's attention will now turn to Thursday’s USDA report. Bolton fired and the next headline that says the US and China will be meeting to discuss trade (which is inevitable) will suddenly carry a little more weight.
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