COCOA (#COCOA) Weekly Special Report based on 1 Lot Calculation:
SUPPLY SIDE:
- TOP PRODUCERS: The biggest producers are Ivory Coast (40% of world total), Ghana (20% of world total), Nigeria, and other small countries in Africa (10% of world total). All in all, West Africa produces around 70% of the world’s total. So, any problems that hit West Africa impact the production on a massive scale.
- CHRONIC AGRICULTURAL PROBLEMS IN WEST AFRICA: Various problems, such as El Nino warm weather (compounded by climate change), Black pod fungal disease, and the swollen shoot virus can cause supply disruptions and price spikes of cocoa. This problem is made even worse by the fact that farmers in these producer countries are relatively poor and don’t have access to modern agricultural methods in order to protect their crops.
DEMAND SIDE:
- TOP CONSUMERS: The biggest consumers of cocoa are developed countries (around 70% of the total demand for cocoa), but we can expect that the demand for cocoa will increase, especially from emerging and developing countries like China and India. (China and India have cocoa consumption growth rates of around 20% and 10% respectively, which means that the market will double on average every 3,6 and 7,2 years). Even though the cocoa consumption market is led by developed countries, we can expect China and India to surpass them really soon because of high growth rates, an emerging middle class, as well as changing dietary habits.
- MONTH OF DECEMBER (CHRISTMAS AND NEW YEAR’S EVE): During the month of December, we see an increased seasonal demand for chocolate as it is the most favorite gift during this time of the year. Higher demand for chocolate translates into higher demand for cocoa.
RECENT DEVELOPMENTS:
- BREAKING: INTERNATIONAL COCOA ASSOCIATION (ICCO) RAISED ITS DEFICIT ESTIMATE (2023/2024 season) TO 478,000 million tons from previous 462,000 million tons. This would be the largest deficit in 60 years.
- DECEMBER 17, 2024: LOW GLOBAL STOCKPILES OF COCOA. We are seeing a noticeable fall in the global stockpiles of cocoa. Cocoa inventories monitored by ICE in US ports have been declining for the past 1-1/2 years and reached a 20-year low on Monday at 1,417,061 bags.
PRICE ACTIONS:
- BREAKING: COCOA HAS RISEN AROUND 74% OVER THE PAST ONE MONTH TO HIT NEAR ALL-TIME HIGH LEVELS (12,209). In April earlier this year, Cocoa hit an all-time high of 12,261.
- SINCE THE BEGINNING OF 2024, COCOA HAS RISEN BY AROUND 190%.
- ANALYST OPINION: JPMORGAN sees a deficit in the 2024/2025 season. The JPMorgan analyst said, "We maintain our view of structurally higher cocoa prices for longer, amid supply-side constraints and firm demand."
COCOA (#COCOA) December 18, 2024
Current Price: 12050
|
Cocoa |
Weekly |
|
Trend direction |
|
|
17000 |
|
|
15000 |
|
|
13500 |
|
|
10700 |
|
|
10400 |
|
|
10000 |
Example of calculation based on weekly trend direction for 1 Lot1
|
Cocoa |
||||||
|
|
||||||
|
Profit or loss in $ |
49,500 |
29,500 |
14,500 |
-13,500 |
-16,500 |
-20,500 |
|
Profit or loss in €² |
47,160 |
28,106 |
13,815 |
-12,862 |
-15,720 |
-19,531 |
|
Profit or loss in £² |
38,931 |
23,202 |
11,404 |
-10,618 |
-12,977 |
-16,123 |
|
Profit or loss in C$² |
70,877 |
42,240 |
20,762 |
-19,330 |
-23,626 |
-29,353 |
- 1.00 lot is equivalent of 10 units
- Calculations for exchange rate used as of 13:45 (GMT) 18/12/2024
There is a possibility to use of 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.