COCOA FUTURES |Long Setup | El Niño Aftershock | Nov 7, 2025Cocoa FuturesICEUS_DLY:CC1!Risk_Adj_ReturnCOCOA FUTURES (CC1!) | Long Setup | Seasonal Tightness, El Niño Aftershock, Channel Base Retest | Nov 7, 2025 🔹 Thesis Summary Cocoa sits at the lower rail of a multi-year rising channel while global stocks remain tight after 2024–25 weather shocks. Seasonality turns constructive into Q4–Q1, and the forward curve is flat to mildly contango, which limits negative carry. I’m looking for a trend resumption long with defined risk. 🔹 Trade Setup Bias: Long Entry Zone: 5,950–6,150 (current ~6,090) Stop Loss: 5,770 invalidation below channel base Take-Profits: • TP1 8,500, prior consolidation and mid-channel • TP2 10,200–10,300, upper midline confluence • TP3 12,500, late-2023 supply shelf • Max Target 17,600–18,000, channel top if squeeze extends 🔹 Narrative & Context Structure: Price tested the channel base and printed a higher low versus the October flush. Visible range shows heavy volume nodes above 7,500 and 9,000 that can act as magnets if momentum returns. Seasonality: Q4–Q1 tends to firm on main-crop uncertainty, then volatility fades into Apr–Jun. The 2024 seasonal outlier underscores how weather and positioning can drive multi-month trends. Term structure: Forward curve is broadly flat to mild contango into mid-2026, then softens into 2027 before lifting again. That keeps roll drag manageable for futures or NIB exposure during a hold through Q1. Supply/Demand: Côte d’Ivoire and Ghana still face yield recovery risk following El Niño and disease pressure. Grind data in Europe and the US remains the clean demand proxy to watch. Risk management frame: We’re long against a clear structural level. If the base breaks, the thesis is wrong, step aside and re-assess near 5,400–5,500. 🔹 Valuation & Context (Pro Metrics, Framed Simply) Commodity analogs to “valuation” guide risk here. • Carry/Term Structure = Mild contango vs prior backwardation → Limited roll cost vs 2024’s squeeze regime → Favorable to maintain long through Q1 → Supports swing hold into seasonal strength. • Inventory-to-Use = Below historical norms → Tight coverage means weather headlines move price faster → Justifies paying a small carry to hold exposure → Aligns with momentum targets. • Volatility Regime = Elevated but compressing vs spring 2025 → Option pricing still rich, but realized is moderating → Spreads or staged entries reduce slippage → Fits scale-in plan at 5,950–6,150. • Producer Hedging Activity = High vs average → More fuel for upside if hedges are reduced into rallies → Adds asymmetry toward TP2 on squeezes. 🔹 Contrarian Angle (Your Edge) Consensus expects normalization through 2026. Yet structure is holding, curve isn’t rewarding shorts, and weather normalization isn’t assured. If mid-channel clears with volume, a path to 12.5k then 17k is open while many remain under-positioned after the 2025 washout. 🔹 Risks • Seasonal air-pocket in Apr–Jun if main-crop shipments exceed expectations. • Policy or logistics relief in West Africa that boosts exports. • Dollar strength or broad commodity de-risking compressing risk premia. 🔹 Macro Considerations • Dollar and global liquidity swings affect softs beta. • If energy softens, cost pressures on processing ease, which can help grinds but may reduce inflation hedging flows. • Monitor BTC/NQ risk tone for cross-asset VAR effects. A volatility spike can unwind commodity longs short-term. 🔹 Bottom Line This is a defined-risk long from structure plus seasonality with acceptable carry. Above 7,500 the tape can accelerate, with 8,500 and 10,200 the first objective levels. Break 5,770 and we’re out clean. 🔹 Forward Path If this gathers interest I’ll post the weekly map with updated mid-channel pivots, plus a term-structure and grind-report tracker. Comment if you want the seasonal backtest or a coffee/sugar correlation pair overlay. Like & Follow for structured ideas, not signals. I post high-conviction setups here before broader narratives play out. ⚠️ Disclaimer: This is not financial advice. Do your own research. Charts may include AI-enhanced visuals. 🔹 Footnote Forward P/E: Price divided by expected earnings over the next 12 months. Lower = cheaper relative to profits. P/FCF (Price-to-Free-Cash-Flow): Price vs. the cash left after investments. A measure of efficiency. FCF Yield: Free cash flow per share ÷ price per share. Higher = more cash returned for each dollar invested. ROE (Return on Equity): Net income ÷ shareholder equity. Shows management efficiency with investor capital. ROIC (Return on Invested Capital): Net income ÷ all invested capital (equity + debt). A purer profitability gauge. Debt/Equity: Debt divided by equity.