COCOA returns above $10,000 per tone ahead of key data
Cocoa jumps over 5% today and returns above $10,000 per ton mark. Price jump comes a day ahead of the release of key data from cocoa market. It should be noted that the jump comes after an almost 10% pullback yesterday. Investors have been trimming their long bets on cocoa in recent weeks amid uncertainty over key cocoa market data, that may trigger large price moves.
Data on cocoa manufacturing in Asia, Europe and America should be released tomorrow. ICCO expects that manufacturing will decline by around 5% this season compared to a year ago. On the other hand, a lot of market participants say that weakness in data may not necessarily mean weakness in demand, as manufacturing can be lower due to limited cocoa availability. Nevertheless, drop exceeding 5% may trigger a negative price reaction.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appApart from that, cocoa traders should also pay attention to reports from companies that produce chocolate. Such data was already presented by Barry Callebaut, which surprised positively with EBIT, but also hinted at a rather muted growth in the coming quarters amid high cocoa prices. Company signals that cocoa market deficit will reach 500 thousand tonnes, what would be deeper deficit than the one suggested by ICCO (300 thousand tonnes).
It should be noted that COCOA has been respecting range of the largest correction in the ongoing uptrend. In order to see a deeper decline, a break below $9,500 per ton would be needed. Should tomorrow's data surprise positively, price may jump and reach $11,000-11,600 area. On the other hand, a Swiss company manufacturing chocolate has been trading sideways since the beginning of a strong upward move on cocoa market. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
