Break-out in Cocoa Futures Created by Technicals Traders
The rally in Cocoa futures higher this week is all technical. Once 2560 price level broke, 2600 was the next price level traders needed for the market to close above. Traders saw the cocoa futures follow-through on its initial break-out higher, trading as high as 2673.
Fundamentals In Cocoa Market
Demand is still a concern. Supply is uncertain. Global market uncertainty is still relevant. After consolidation in the March contract for almost two months, the contract was due for a break-out. Once 2560 price level broke, 2600 was the next level and price needed for the market to close above to see the cocoa market follow-through on its initial break-out.
Looking Ahead In Cocoa Trade
To end the week, first notice day on the December contract is November 15th, and longs will exit or roll their positions. The Commitment of Traders data after the close Friday will also help us see how traders are positioning themselves as we move to the March contract and focus on the new year.
Traders will continue to monitor supply/demand and weather in key growing regions. If the currencies come back into play, look for activity in the Euro or Pound to add to current support levels.
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