Get started

Cocoa

[COCOA] Cacao timing to take the correctionCurrently, the PEPPERSTONE:COCOA (cacao) market has undergone a notable upside rally over recent days, culminating in a significant move towards the $6000 level. Today, we observed a precise hit of this key psychological level, followed by a clean rejection, prompting a short position. The primary objective now is to remain below this crucial $6000 level, aiming to capitalize on a potential correction in the recent upward surge. By maintaining short positions, we aim to capture the potential downside movement with a relatively small risk, yet the possibility of a substantial gain. Initially, the trade unfolded favorably, with the price action aligning with our short position. However, subsequent movement saw a retracement back towards the entry level, highlighting the need for vigilance and adaptability in response to evolving market conditions. As we await further price action, it's imperative to remain attentive to developments in the PEPPERSTONE:COCOA market. Tomorrow's movements will provide valuable insights into the durability of the recent rejection and the potential continuation or reversal of the prevailing trend. In navigating this trade, maintaining a disciplined approach and closely monitoring key levels and indicators will be crucial. While the potential for a significant win exists, it's essential to manage risk effectively and remain adaptable to changing market dynamics.
ICEUS:CC1!Short
by ArnoSG
1
Easter eggs likely to get expensive as cocoa trades at a 46-yearCocoa was the best performing commodity in 2023, recording a price increase of 64%1. Cocoa prices have continued to rally in 2024 crossing the threshold of US$5000 Metric Ton (MT) on 2 February 2024. The last time cocoa prices rose to this magnitude was in 1977 when it reached US$5379MT. A similar situation prevailed back then, adverse weather conditions led to production scarcities in major cocoa production countries including Ghana and Ivory Coast. Current crop conditions remain unfavourable in key cocoa growing regions Weather conditions in Africa have been unfavourable particularly in the Ivory coast and Ghana. This matters as the cocoa producing belt of West Africa is responsible for generating over 80% of the total global output. Ghana is the second biggest producer in the world. Moisture levels have been below average, and more trees have been affected by the Swollen Shoot Virus (CSSV). Main crop cocoa arrivals at ports in top grower Ivory Coast had reached 951,710 tonnes by 21 January since the start of the season on 1 October, down 33% from the same period last season. The cocoa harvest is already falling well behind the prior year’s level. Added to that, the key West African Cocoa growing region is facing dry Harmattan winds which could destroy the cocoa pods growing for the Ivory Coast’s mid-crop in April. Ivory Coast halts forward sales of cocoa Ivory coast has suspended forward sales of cocoa beans for the 2024/25 season amid uncertainty about the production volumes. The country has seen its cocoa production falling this year due to adverse weather and diseases damaging the crop. Owing to which the country doesn’t want to oversell the 2024/25 crop until the production estimates are available. Buyers typically utilise forward sales to secure longer-term supplies. As Ivory Coast suspends forward sales, the absence of forward buying is likely to spur spot purchases in the near term. Cocoa prices in January itself have risen 13%2, on strong buying activity in the physical market. The front end of cocoa futures curve remains in backwardation, yielding a positive implied roll yield of 3.2% indicating near term tightness in supply. Bearish grinding data fails to arrest cocoa’s price rally Concerns started to surface that demand growth for cocoa will be impacted by higher cocoa prices. This was confirmed by the Q4 2023 data on cocoa processing which showed the grind number for North America was down 3% yoy to 103,971MT, Europe declined 2.5% yoy to 350,739MT while Asia saw the biggest decline at 8.55% to 211,202MT.3 The lower grind data is likely to have reduced the deficit on the global cocoa market from 350,000MT to 300,000MT for the 2023/24 crop year. However, expectations of lower grinding data was being anticipated by the market owing to higher cocoa prices. Amidst the current backdrop, the cocoa market is likely to face a supply deficit in the current crop year for the third successive year. The extension of the current price rally remains dependent on development of the mid-crop in Ivory Coast and Ghana and the likely impact of the CSSV. Net speculative positioning in cocoa futures is more than 1-standard deviation (stdv) above the five-year average underscoring bullish sentiment towards cocoa. Sources 1 Source: Bloomberg Cocoa Futures price performance from 31 December 2022 to 29 December 2023 2 Source: Bloomberg Cocoa Futures price performance from 3 January 2024 to 31 January 2024 3 Bloomberg as of 31 January 2024 This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
NYMEX:CJ1!
by aneekaguptaWTE
The jury is still out on the impact of El NiñoWeather has always been a key factor influencing the outlook for major commodities, especially agricultural commodities. The arrival of El Niño in June 2023 has led to a wide divergence in the performance across agricultural commodities. As discussed in our previous blog “What does El Niño’s return mean for commodities?”, the effects of El Niño include specific wind patterns across the Pacific Ocean, heavy rain in South America, and droughts in Australia and parts of Asia including India and Indonesia. This is why certain commodities such as cocoa, sugar, soybean oil and grains tend to depict a price positive environment following an El Niño phenomena. So far in 2023 – cocoa, sugar and cotton have been key beneficiaries of the El Niño weather phenomena whilst wheat, corn and soybeans have posted a weaker performance. How is the El Niño evolving? With the National Oceanic Atmospheric Administration (NOAA) forecasting more than a 95% probability of El Niño continuing through the Northern Hemisphere winter through January - March 2024 , chances are high that we continue to see further weather abnormalities over the coming months. There is now around a 71% chance that this event peaks as a strong El Niño this winter1. The main El Niño monitoring metric showed the average sea surface temperature in the central and eastern equatorial Pacific Ocean—was 1.3˚Celsius (2.3˚Fahrenheit) above the long-term average in August, up from 1˚C in July1. The whole ocean (Pacific, Atlantic, Indian, Artic and Southern Ocean ) was over 1˚C above the 20th-century average in August, the first time that’s happened in the 174-year record2. An important aspect of ocean changes is the sea level height. Presently there is a strong ocean sea level rise in the easterly tropical Pacific, a clear sign that El Niño is active3. The changes in the ocean heat content are mainly due to the expansion and rise of the strong subsurface warm pool. This also causes the sea level height to increase, usually associated with warmer waters. Agricultural commodities price response to El Niño will vary The growing of agricultural products is sensitive to weather patterns. For some crops, El Niño could boost production, while for others it could damage production. This is because the drift in warm water across the Pacific moves’ evaporation and rain such that Southeast Asia and Australia tend to get drier while Peru and Ecuador tend to receive more precipitation. Should the weather event intensify, it could be a significant catalyst for price gains in cocoa, soybean oil, sugar, and grains as discussed in “What does El Niño’s return mean for commodities?” blog. Cocoa and sugar lead the commodity scoreboard in El Niño ’s slipstream Cocoa has been an important beneficiary of the El Niño. The concentration of supply in West Africa, nearly 70% of global supply4, underlines the outsized impact of the region’s weather patterns on the world’s cocoa supplies and prices. The emerging El Niño is likely to hamper the next main crop that begins in October as it tends to bring dry and hot conditions to West Africa. This comes at a time when heavy rains in West Africa have triggered the Cocoa Swollen Shoot Virus Disease (CSSVD) and the spread of Black pod diseases. The diseases alongside the high cost of inputs, have not spared the two leading producers (i.e., Côte d’Ivoire and Ghana) and affected their volume of production5. Despite high cocoa prices, demand evident from cocoa grinding continues to rise in Asia and the US6. Sugar has also benefitted from the emergence of El Niño as lower rainfall in Asia, namely India and Thailand have resulted in lower sugar production. However, we expect further upside for sugar prices to be capped as Brazil (the world’s largest producer and exporter) is likely to fill the gap. Production in Brazil’s main Centre- South (CS) growing region between the start of the crop year in April and mid-August already amounted to 22.7mn tons, which is up 22% over the same period last year7. What’s more, the sugar mix increased to 51.1% in H1 September, up from 50.7% in H2 August signalling that Brazilian mills continue to favour sugar production over ethanol amidst higher sugar prices5. Extreme weather conditions in China have reduced domestic supplies. China is also planning to release 1.3mn tons of sugar from its reserves, to increase domestic supplies and stabilise prices4. Wheat prices stand to benefit as key producers to face the impact of El Niño On the other end of the spectrum, grains (namely wheat, corn and soybeans) continued to struggle as the United States Department of Agriculture (USDA) outlined a more bearish outlook for corn while bullish for wheat. The corn harvest is progressing well with 15% of the crop harvested, up from 11% at the same stage last year and also above the five-year average of 13%8. Moscow’s revocation of the secure grain’s corridor through the Black Sea, alongside the Russian attacks on key infrastructure along the Danube River in Ukraine, have lowered grains exports from Ukraine by 25% over the prior year. Yet wheat prices have fallen sharply this year as Russia’s record crop is enabling it to ship huge volumes to world markets. The Grain Industry Association of Western Australia has likewise reduced its crop forecast for the region by 1.5 million tons to 8.5 million tons. Most of Australia is expected to face warm and dry conditions over the next three months9, so further downward revisions are on the cards. Argentinian farmers are also battling with a drought. The Buenos Aires Grain Exchange has already warned that the crop in 2023/24 could be impaired if there is no rainfall in the near future. As the prospects for the wheat crop amongst major producer countries are becoming increasingly weak, we expect wheat to benefit from these rising tailwinds. Conclusion There has been a wide divergence within the commodity linked Exchange Traded Funds (ETF) flows since the start of the year. Agriculture linked ETFs have seen US$458mn worth of outflows while energy linked commodity ETFs raked in US$1.2Bn worth of inflows10. Agriculture linked commodity ETFs likely faced outflows owing to profit taking. We continue to expect plenty of upside in select agricultural commodities as the impact of the El Niño is likely to intensify over the upcoming winter. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
ICEUS:CC1!
by aneekaguptaWTE
What does El Niño’s return mean for commodities?The El Niño weather phenomenon is back on the radar. A new update from the World Meteorological Organization (WMO) forecasts that there is a 90% probability of the El Niño event continuing during the second half of 2023. What is the El Niño phenomenon? The El Niño Southern Oscillation (ENSO) is an oceanic-atmospheric phenomenon with origins in abnormal variations in surface water temperatures in the Central and Eastern Pacific (Latin American coast). It comprises two opposing phenomena (La Niña and El Niño) that historically occur every 2 to 3 years. La Niña brings colder, wetter weather (lasts between 1-3 years), while El Niño brings warmer, drier weather (lasts between 9-12 months). Typical impacts of El Niño When El Niño starts picking up, trade winds slow down and the warm water near Asia starts moving back eastward across the Pacific, reaching the coast of South America. The drift in warm water also moves evaporation and rain such that southeast Asia and Australia tend to get drier while Peru and Ecuador tend to see more precipitation. El Niño typically picks up over the summer and shows its strongest effects over the winter in the Northern Hemisphere. However, the characteristics of the El Niño vary according to its timing and amplitude. World sees hottest July on record El Niño weather disturbances, which affect the entire Indo-Pacific region, lead to heatwaves and droughts. This is why the developing El Niño is likely to amplify the negative effects of climate change in Asia-Pacific, South and East Africa and the Americas. So, it comes as no surprise that large parts of the Northern Hemisphere have witnessed intense heat and devastating rainfall in the first half of 2023. July is expected to be the hottest month on record1; China set a new national daily temperature record in July and was hit by record-breaking rainfall at the start of August2. Large parts of the USA were also gripped by extensive heatwaves, with high temperatures in numerous places3. Canada experienced its worst wildfire season on record, as did parts of the Mediterranean. Implications for agricultural commodities The growing of agricultural products is sensitive to weather patterns. For some crops, El Niño could boost production, while for others it could damage production. Should the weather event intensify, it could be a significant catalyst for price gains in cocoa, soybean oil, sugar and grains. Meanwhile it could be price negative for cotton and coffee. We analysed prices of agricultural commodities over the past 11 episodes of El Niño’s, dating back to the 1960s. In 8 of the last 11 occurrences, wheat, soybean oil and cocoa traded higher by an average of 14%, 6% and 16% respectively, 6 months after the El Niño started. In 9 out of the past 11 occurrences, soybean oil and cocoa traded higher. Soybean oil benefits from tight palm oil supply In the past, El Niño has impacted the supply of agricultural commodities such as palm oil, sugar, wheat, cocoa, and rice. Based on the local weather agency Badan Meteorologi Klimatologi (BMKG)’s reporting, approximately 40 percent of Indonesia’s oil palm area experienced below-normal precipitation in June 20234. The BMKG also indicated that El Niño weather patterns are at weak-to-medium intensity and are expected to peak in August to September 2023. The shortage of palm oil tends to have a knock-on effect on demand for close substitutes such as soybean oil. This comes at a time when the escalation of attacks between Russia and Ukraine is also raising concerns on the supply of edible oils from the Black Sea region. Escalating tensions and the blockade of the Black Sea shipping routes are likely to aggravate the global edible oil and grain supply situation. Rice supply at the mercy of El Niño Dry weather has been threatening crops in the world’s second largest rice exporter, Thailand, with the country facing widespread drought conditions from early 2024. The government has already asked farmers to restrict their planting to just one crop this year. While monsoon rains have brought some relief to rice fields in parts of India (the world’s largest exporter), the country banned exports of non-basmati white rice5. Tightness in the rice market could have a knock-on impact on other staple substitutes, such as wheat. Cocoa benefits from tight supply The return of El Niño conditions is also supporting cocoa because the weather phenomenon tends to bring hot and dry conditions to West Africa. Cocoa growing is concentrated in Africa, with approximately 70% of production in the continent. Historically, El Niño has led to production shortfalls as the weather phenomenon leads to drier spells in Africa during key growing periods. This year, farmers in Ivory Coast, Ghana and Nigeria have reported signs of black pod disease, which causes cocoa pods to turn black and rot. That could also affect the quality or curb the output of beans. The cocoa market is expected to be in a third year of deficit in the 2023-24 season which should keep cocoa prices well supported. Conclusion While an El Niño event is not guaranteed (it has less than a hundred percent probability), and the strength or the duration of the event remain uncertain, it comes on the heels of war which has caused significant disruption to the flow of grains and oilseeds. Inventories of many agricultural commodities (wheat, corn, soybean oil and cocoa) are trading below their 5-year averages, making it harder to absorb a production shock6. El Niño could, therefore, be price supportive for these agricultural commodities. Sources 1 Source World Meteorological Organization. 2 Source China Meteorological Administration. 3 Source US National Weather Service. 4 Source United States Department of Agriculture, as of 3 August 2023. 5 Source Indian Ministry of Consumer Affairs as of 21 July 2023. 6 Source United States Department of Agriculture, as of 31 July 2023. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
N
by aneekaguptaWTE
Cocoa - SHORT; SELL it here!This is very much in the same boat as Coffee - out of season, increasingly negative fundamentals, etc.. (Now, even cocoa brokers are entertaining each other tall tales, trying to pass the time and in an attempt to reinvigorate the business. Yeah, how could that not work?! ... ;-) A resumption of a U NYSE:D rally, at any point, will put a further lid on this one - much like on coffee. Looking down from here, there is a looong way to go, enough to catch vertigo. This has also been wicking here, something fierce, for some days now!
ICEUS:CC1!Short
by Nemo_Confidat
2
CC Cacao: Trade Commodity THIS EasterHi Traders, Investors and Speculators of the Charts 📈📉 Ev here. Been trading crypto since 2017 and later got into stocks. I have 3 board exams on financial markets and studied economics from a top tier university for a year. Are you looking to make a trade out of Easter weekend? Look no further than Cocoa futures, or chocolate. Cocoa is a soft commodity that is used to produce chocolate, and it is traded on several global commodity exchanges. One of the most significant exchanges for trading cocoa futures is the ICE Futures US (Intercontinental Exchange Futures U.S.). The exchange offers futures contracts for cocoa, which allows investors to speculate on the future price of cocoa beans. The cocoa futures contract on the ICE Futures US is traded under the symbol CC. Each CC contract represents 10 metric tons of cocoa beans, and the contract price is quoted in U.S. dollars per metric ton. The contract months for trading cocoa futures are March, May, July, September, and December. The price of cocoa can be influenced by several factors, including supply and demand, weather conditions, and political instability in cocoa-producing regions. For example, adverse weather conditions, such as drought or flooding, can reduce cocoa yields and increase prices. Similarly, political unrest or conflicts in cocoa-producing countries can disrupt supply chains and lead to higher prices. Easter Weekend is a time known well for Easter bunny egg hunts and other chocolate delights, meaning that demand increases for cocoa in the months leading up to Easter. Considering that from a chart analysis the price of Cocoa has already increased over the past few months, it is the ideal time to consider a short right after Easter. Easter has become a global celebration, and many cultures around the world have their unique ways of celebrating the holiday. For example, in Greece, the week leading up to Easter is called "Holy Week," and it is a time of fasting and religious observances. On Easter Sunday, families gather to celebrate with a feast of lamb and other traditional foods. In the United States, Easter is celebrated with the Easter Bunny, who brings baskets of candy and treats to children. The Easter Bunny has its origins in German folklore, where it was a symbol of fertility and new beginnings. The tradition was brought to America by German immigrants in the 1700s. In many Latin American countries, Easter is celebrated with parades and processions, where people carry statues of Jesus and the Virgin Mary through the streets. In Spain, there is a tradition called "Semana Santa," or "Holy Week," which involves elaborate processions and celebrations. In India, the Christian community celebrates Easter by attending church services and exchanging gifts and greetings with friends and family. The holiday is also an opportunity for people of different faiths to come together and celebrate the arrival of spring. In conclusion, Easter is a holiday that is celebrated around the world as a time of new beginnings, renewal, and the victory of life over death. Whether celebrated with bunnies and candy or religious observances and parades, Easter is a time for people of all cultures and faiths to come together and celebrate the beauty and wonder of spring. _______________________ 📢 Show us some LOVE 🧡 Follow for daily updates and trade ideas on Crypto , Stocks , Forex and Commodities 💎 We thank you for your support ! CryptoCheck
ICEUS:CC1!Short
by CryptoCheck-
34
Cocoa Futures ( CC1! ), H4 Potential for Bullish ContinuationTitle: Cocoa Futures ( CC1! ), H4 Potential for Bullish Continuation Type: Bullish Continuation Resistance: 2838 Pivot: 2660 Support: 2565 Preferred case: Looking at the H4 chart, my overall bias for CC1! is bullish due to the current price above the Ichimoku cloud, indicating a bullish market structure. If this bullish momentum continues, expect price to retest the pivot at 2660 where the overlap support and 50% Fibonacci line is before heading back up towards the resistance at 2838, where the previous swing high is. Alternative scenario: Price may head back down towards the support level at 2565, which is the overlap support. Fundamentals: There are no major news.
ICEUS:CC1!Long
by Genesiv
Cocoa Futures ( CC1! ), H4 Potential for Bullish ContinuationTitle: Cocoa Futures ( CC1! ), H4 Potential for Bullish Continuation Type: Bullish Continuation Resistance: 2838 Pivot: 2660 Support: 2565 Preferred case: Looking at the H4 chart, my overall bias for CC1! is bullish due to the current price above the Ichimoku cloud, indicating a bullish market structure. If this bullish momentum continues, expect price to retest the pivot at 2660 where the overlap support and 50% Fibonacci line is before heading back up towards the resistance at 2838, where the previous swing high is. Alternative scenario: Price may head back down towards the support level at 2565, which is the overlap support. Fundamentals: There are no major news.
ICEUS:CC1!Long
by Genesiv