Cocoa/Sugar Spread: Trade Signal Triggered

Cocoa/Sugar Spread

Yesterday the spread between the value of one March cocoa futures contract and one March sugar futures contract closed at +$11,947.20 (premium cocoa). This put it below the rising weekly 10-day Moving Average for the first time in nearly five months, signaling a bearish trend change.

March Cocoa Sugar spread weekly

March Cocoa Sugar spread weekly

A hypothetical trade for the blog was triggered to sell one 10-ton March cocoa contract and buy one 112,000 lb. March sugar #11 contract at +$11,947.20 (premium cocoa). Initially, the exit strategy is to liquidate the spread on a two-consecutive day close above +$15,872.

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