Cocoa cooling off?

I follow all sorts of odd commodity futures, since the more you follow, the more set-ups you can potentially find. Cocoa got my attention a few weeks ago as it made a 30-year high on lower momentum than its previous high, and I took a short position when it stalled out at over $3400 per metric ton. It had a violent sell-off several sessions ago, and has so far failed to rebound, suggesting that animal spirits may be waning. This is a daily chart going back to August:



You can see in this monthly chart that if this new high does mark the end of the bull market, even a retracement of the last leg would take prices to the $2500 area:


The 25-year view shows how cocoa futures are part and parcel of the larger commodities complex:


Like other commodities, cocoa was very expensive in the mid-to-late 1970s, with inflation adjusted prices about triple or even quadruple today’s high prices (i.e., nominal prices ranged as high as $4000 in 1978-1979).

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