Cocoa futures have retreated after recent highs. March cocoa futures broke above 2800 but failed to hold as traders took profits heading into the Thanksgiving holiday. As news broke that Europe would be easing its Covid-19 restrictions in certain areas, the hope that cocoa demand would rise has supported the market this week. If businesses have “soft” reopenings and chocolate sales increase, cocoa prices could end the year above 2800.
The latest cocoa rally could also thank the recent announcements from multiple vaccine providers that state they’re getting closer to releasing their versions of a Covid-19 vaccine. Equity markets like the news, which carried over to most major commodities. Vaccines lead to reopenings of businesses, schools, restaurants, and lifts on travel restrictions – all supportive of higher commodity prices.
Technically, the chart is vulnerable to a sell-off after a major move this high and this quickly. The news that caused this rally is positive for the long-term trade, but nothing certain in the short-term, so expect volatility through the end of the year.
March Daily Chart
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