Although the current cocoa chart is a bit confusing, it’s been in a wide range-bound trade since the start of 2021. That being said, look for March cocoa to trade between 2500-2600 in the short-term. Chocolate companies reported weaker earnings in 2020 due to the pandemic, but if the vaccines can help individuals get back to a new normal, 2021 should see an increase in revenue. 

The macro-sentiment of late has been slowly moving in a positive direction as more is learned about the vaccination process. More reopenings and fewer lockdowns will be supportive for the “foods” prices in commodities. 

The currency markets and equity markets are also providing support to cocoa prices. Weather premium in key growing regions must be accounted for, too. West Africa is experiencing their dry season and it appears that the coming days may be even hotter than previous years. Heat could potentially hurt production numbers, but boost prices. 

Grinding data for the coming year is expected to be fairly in-line with last. If we see consistent levels, prices will hold or move higher on any data that comes in more positive. For now, traders need to be patient and see how the first quarter plays out on the macro side of commodities.

March Daily Chart

Source: Tradingview

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