Mooses in the Markets - Technicals Show Weakness and Supply, Demand Seesaw Continues - Cocoa Futures

During Wednesdays trading session, May cocoa attempted to break some key support levels. The contract ended up closing right above the 2140 level, trading below support, but closing 3 ticks above. With a close below the 9-day moving average (typically a bearish signal), traders may see a few more down days. With the high put in at 2201, prices attempted to break the key resistance level of 2200 but failed on the anticipation of stronger production data.

If the crop comes in bigger, look for prices to move lower unless global demand can grow stronger. A true supply reading out of West Africa wont be available for weeks, but rumors will move the market in the meantime. Right now, the Asian demand should be able to provide some support for higher prices. Grinding data from that region looks to be moving higher against historical data. Demand from N. America and Europe continues to provide volatility and uncertainty. These areas continue to be wild cards.

With Prime Minister Mays request to have Brexit discussions pushed out to late June currencies will continue to be key indicators for cocoas short-term outlook as well.

WEB OE May 19 Cocoa Daily Chart

***If you are interested in reading more about the soft markets, click on the link below:

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.