As we near the end of 2020, analysts start to dissect and predict certain possibilities in the new year. Will cocoa demand be up? What will production data be? Will a Covid-19 vaccine speed up the “back to normal” process?
Many of cocoa’s 2020 stories have been on repeat. 2021 could see cocoa prices test highs, while cocoa prices are very much demand-driven. In a down year for many commodities, cocoa was able to find a few big rallies higher than when the fundamentals were working with the technicals. If chocolate companies start the new year with better-than-expected earnings, we could see cocoa trade back towards 2800: we were just there in the March contract. If Q1 can give us direction on the production numbers, 3000 is completely possible by mid-year.
The unknowns, outside of the Covid-19 discussion, that could help a cocoa price rally are a few key indicators for the soft– what happens with Brexit? What levels will the EUR and GBP trade? Will unrest in Ivory Coast, West Africa affect output?
With all of these factors waiting to be determined, cocoa is a market that will show volatility in the coming year.
March Cocoa Daily Chart
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