COCOA (#COCOA) Weekly Special Report based on 1 Lot Calculation:
GLOBAL COCOA MARKET:
- Cocoa is a versatile ingredient used worldwide in confectionery. From chocolate bars to baked goods, cocoa enriches flavor and texture. It also contains antioxidants, potentially providing health benefits. Additionally, cocoa cultivation supports millions of farmers globally.
- Total world cocoa production remains relatively small, at about 5 million tons annually. (Source: Statista)
- The Global Cocoa Market size is expected to reach $38.3 billion by 2030, rising at a market growth of 4.8% CAGR during the forecast period. (Source: International Cocoa Organization)
KEY FUNDAMENTALS:
- TOP COCOA PRODUCERS (tons): 1. Ivory Coast - 2.200m, 2. Ghana - 1.100m, 3. Indonesia - 0.667m, 4. Ecuador - 0.337m, 5. Cameroon - 0.300m
- SUPPLY DISRUPTIONS: Ghana and Ivory Coast, which produce over 60% of the world's cocoa, are facing severe harvest problems.
- The world is facing the largest cocoa supply deficit in more than 60 years and consumers could start to see the effect at the end of this year or early 2025.
- Issues such as black pod disease, swollen shoot virus, and aging trees have impacted cocoa yields, exacerbated by heavy rains and El Niño weather conditions.
- CONSUMER TRENDS:
- Traditional consumer markets for cocoa include Europe, North America, and South America, where consumption has shown stagnation in recent years.
- However, the market is experiencing growth driven by rising consumption in Asia, reflecting changing consumer preferences and increasing demand in emerging economies.
NEWS AND ANALYSIS:
- EXPECTED GLOBAL DEFICIT: 439,000 tons. The International Cocoa Organization (ICCO) said in a recent report that grinding activities were adjusted higher, though they are still expected to fall. As a result, the worldwide cocoa deficit will be 439,000 metric tons, 17% higher than its previous estimate earlier this year (374,000).
- INTERNATIONAL COCOA ORGANIZATION (ICCO): COCOA STOCKPILES DROPPED. The International Cocoa Organization announced that cocoa stockpiles in surveyed warehouses decreased to 1.06 million tons on March 31, from 1.09 million tons at the end of September. These estimates are based on stocks held in warehouses located in Europe, Ghana, Ivory Coast, and the Intercontinental Exchange US, all of which participated in the surveys for both periods.
- NEXT ICCO MONTHLY MARKET REVIEW: EXPECTED LAST WEEK OF JULY, 2024.
- DEMAND UP AMID LIMITED SUPPLY: The European Cocoa Association reported that Q2 European cocoa unexpectedly rose +4.1% year on year to 357,502 million Tons, versus expectations of a -2% year on year decline.
PRICE ACTION AND VOLATILITY
PRICE ACTION: Cocoa prices exhibit high volatility, experiencing significant fluctuations over short periods. Cocoa is currently trading at 8,550. It posted an all-time high of 12,261 (April 19th, 2024). Should a recovery follow, it would present an upside potential of ~43%. Cocoa prices have risen up ~106% since the beginning of 2024 and up ~175% from one year ago (when the commodity was trading around $3,100). However, the price could decline further.
COCOA (#COCOA) JULY 16, 2024
Current Price: 8,550.00
|
Cocoa |
Weekly |
|
Trend direction |
|
|
12,200.00 |
|
|
11,000.00 |
|
|
10,000.00 |
|
|
7,100.00 |
|
|
7,000.00 |
|
|
6,900.00 |
Example of calculation based on weekly trend direction for 1 Lot1
|
Cocoa |
||||||
|
Profit or loss in $ |
36,500.00 |
24,500.00 |
14,500.00 |
-14,500.00 |
-15,500.00 |
-16,500.00 |
|
Profit or loss in €² |
33,493.15 |
22,481.70 |
13,305.50 |
-13,305.50 |
-14,223.12 |
-15,140.74 |
|
Profit or loss in £² |
28,138.18 |
18,887.27 |
11,178.18 |
-11,178.18 |
-11,949.09 |
-12,720.00 |
|
Profit or loss in C$² |
49,959.56 |
33,534.50 |
19,846.95 |
-19,846.95 |
-21,215.70 |
-22,584.46 |
- 1.00 lot is equivalent of 10 units
- Calculations for exchange rate used as of 09:00 (GMT+1) 16/07/2024
There is a possibility to use Stop-Loss and Take-Profit.
- You may wish to consider closing your position in profit, even if it is lower than suggested one.
- Trailing stop technique could protect the profit.