- The price of Cocoa as of this morning is near the 5174.0 ratio.
- Since the start of January 2024, Cocoa has climbed in price from nearly 4033.9 on the 8th of January. Meaning more than a twenty percent rise in price has been seen in the commodity in a handful of weeks.
- Cocoa trades per metric ton in USD and is speculated on via the Intercontinental Exchange (ICE).
- The price being discussed in this article is regarding the forward month for Cocoa.
Yesterday’s high for Cocoa reached the 5226.0 level and sustained these record values for nearly six hours. Cocoa like all commodities is volatile, but as of right now it is leading the pack regarding price velocity. Day traders who want to wager on Cocoa via CFDs need to understand the speed in which the commodity moves. Risk management must be understood before indulging in Cocoa trading.
Weather Related Concerns and Fear of Supply Shortfalls
Weather related concerns continue to dominate the price of Cocoa. Supply and crop concerns stemming from last year’s poor production results in West Africa due to a tough growing season sparked plenty of upwards momentum in Cocoa, and the commodity’s surge higher has been triggered again over the past month. Poor growing conditions due to dry conditions which the El Nino weather conditions are still creating worries among buyers and causing price frenzy as fears of Cocoa shortages are stirred.
West Africa is the largest growing region of Cocoa, with the Ivory Coast and Ghana being large producers among other African nations. Over 30% of exports are sent to Europe for processing. Some additional nations that grow Cocoa in relatively large numbers include Ecuador and Indonesia along with others. Day traders in Cocoa may want to seriously look at weather related information for West Africa as much as they examine technical charts for the commodity.
Cocoa’s Speculative Price and Dangers
Traders who feel the urge to speculate on Cocoa need to make sure they are not overly leveraged. Wagering on Cocoa at the current price levels means that a trader needs to understand the amount of volatility which could affect their active positions. While the trend of Cocoa has certainly moved towards the sky, gravity is a known element also while trading which means reversals lower can happen.
- The commodity is certainly within record territory, but yesterday’s pull back from highs is a sign that the market could actually tempt some short-term speculators.
- The question is when the trend higher will begin to erode, but if weather concerns continue and supply is truly short, Cocoa may continue to propel stronger buying.
Cocoa Short Term Outlook:
Current Resistance: 5189.0
Current Support: 5149.0
High Target: 5232.0
Low Target: 5116.0
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