May 4—The mystery knock on cocoa's door this week did not leave a bouquet of flowers or candy. Cocoa prices have plummeted nearly 30% in just two weeks, topping out at almost $12,000 per ton back on April 19 for the most-active contract and falling to a low this week of $6,990 per ton before recovering Friday morning. A 40% drop from the all-time high to the most recent low.

The runup in prices — attributed to the extreme drought and heat in the cocoa-producing West African nations, especially Ghana and the Ivory Coast — is the fundamental reason behind the push in prices, and those fundamental supply issues have not changed. But prices over $10,000 per ton might not be back again, and if they do come back, bullish traders will probably be leery of trying to push for new highs after the recent crash.

Grain bulls come out of hibernation

Corn and soybean futures both rallied this week, which corresponds with a seasonal price move as volatility and weather concerns take center stage in the months of May, June and July. It's no different this time. Depending on who you listen to, the story is either wide coverage of significant rains the last two weeks over large swaths of the Midwest that could delay planting, or there have been some touting the impact of transition from El Nino back to La Nina that could bring more extreme hot July temperatures with little moisture. The La Nina transition headline is not new news. Managed Money (funds) have been heavily net short the corn and bean market for a while and are going through their own transition of lightening the load in case the weather concerns prove to be more than just talk.

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