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 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 could cause supply disruptions and price spikes of cocoa. This problem was 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.
- NEW LAW LIMITING COCOA FARMLAND. At the end of 2024, the EU put a new anti-deforestation law into effect that placed pressure on companies offering commodities in EU markets to prove that those commodities did not come from recently deforested land. This is reducing the number of farmers that are eligible to sell cocoa to the EU markets.
DEMAND SIDE:
- TOP CONSUMERS: The biggest consumers of cocoa are developed countries (around 70% of the total demand for cocoa), but we could 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 could double on average every 3,6 and 7,2 years). Even though the cocoa consumption market is led by developed countries, we could expect China and India to surpass them soon because of high growth rates, an emerging middle class, as well as changing dietary habits.
RECENT DEVELOPMENTS:
- BREAKING: INTERNATIONAL COCOA ASSOCIATION (ICCO) RAISED ITS DEFICIT ESTIMATE (2023/2024 season) TO 478,000 million tons from the previous 462,000 million tons. This would be the largest deficit in 60 years. This comes following the ICCO's latest quarterly report, published in November 2024.
- JANUARY 17, 2024: LOW GLOBAL STOCKPILES OF COCOA. We are seeing a noticeable fall in the global stockpiles of cocoa. Cocoa inventories monitored by ICE (International Continental Exchange) in US ports have been declining, reaching a 21-year low.
PRICE ACTIONS:
- PAST ONE-YEAR PERFORMANCE: SINCE JANUARY 23, 2024, COCOA PRICES HAVE RISEN BY AROUND 156%.
- ALL- TIME HIGH (DECEMBER 18, 2024): 12,911. If the cocoa price tries to recover to its recent all-time high of 12,911, it can then offer an upside of around 12%, Although, prices can fall, too.
- 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) January 24, 2025
Current Price: 11530
|
Cocoa |
Weekly |
|
Trend direction |
|
|
15000 |
|
|
14000 |
|
|
12900 |
|
|
10400 |
|
|
10200 |
|
|
10000 |
Example of calculation based on weekly trend direction for 1 Lot1
|
Cocoa |
||||||
|
|
||||||
|
Profit or loss in $ |
34,700 |
24,700 |
13,700 |
-11,300 |
-13,300 |
-15,300 |
|
Profit or loss in €² |
33,071 |
23,540 |
13,057 |
-10,769 |
-12,675 |
-14,582 |
|
Profit or loss in £² |
27,928 |
19,879 |
11,026 |
-9,095 |
-10,704 |
-12,314 |
|
Profit or loss in C$² |
49,726 |
35,396 |
19,633 |
-16,193 |
-19,059 |
-21,925 |
- 1.00 lot is equivalent of 10 units
- Calculations for exchange rate used as of 09:50 (GMT) 24/01/2025
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.