My April 12 Barchart recap on the soft commodities highlighted the new record highs in cocoa futures and the sector’s overall bullish price action. I concluded:
The bottom line is that the risk of significant price corrections increases the higher prices rise. Therefore, we should expect wild price volatility to continue in soft commodities in Q2 and beyond. The trend is always your best friend in markets until they bend. It is virtually impossible to pick tops or bottoms in any market, so the risk in the soft commodities sector remains high in early Q2. Investors and traders must approach these markets with extreme care and attention to risk-reward dynamics.
