Cocoa Swing LongTrade idea based on supply and demand, intermarket analysis, COT positioning and cross market valuation. Following a structured approach with clear entry, risk management, and confluence factors.
CC1! trade ideas
The Cocoa Code - Smart Money is Preparing for a Bullish MoveCocoa is setting up for a long trade upon a confirmed daily bullish trend change.
The fundamentals underlying this market suggest a bullish move of some significance is brewing, and would confirm if we see a daily bullish entry trigger.
Commercials at extreme in long positioning relative to last 26 weeks of positioning.
Advisor Sentiment Index at bearish extreme, a great contrarian signal when juxtaposed with the commercials positioning.
Open Interest is at a 3+ year low. Low levels of open interest are generally associated with market bottoms.
Valuation measure against Treasuries & Gold shows Cocoa is undervalued.
True Seasonal tendency for Cocoa to rally into April.
Front month premium implies the commercials want this commodity so bad that they are willing to pay more to acquire it now than later in the future. This implies a commercially driven bull market is at hand.
130 day cycle points to bullish momentum for Cocoa until May.
Accumulation by the commercials is evident via the ProGo & Ultimate Oscillator divergence.
What does this all mean? It means the fundamental conditions underlying this marketplace point towards a bullish move on the horizon.
Long Idea on CC1! (Cocoa)1)Climate change is having a significant impact on cocoa production in West and Central Africa, according to a study by Wageningen University & Research (WUR). The region accounts for more than 70% of global cocoa production. Changes in temperature and rainfall are making some areas less suitable for cocoa cultivation.
2) Seasonality gives us a bullish pattern which is 98% correlated with the actual price
3)quantitative data shows 80% win rate with a good profit factor
4) The price rejected the 50 EMA forming a Pin Bar Candlestick pattern
5) The price also bounced on a demand zone
6) Price is undervalued against several benchmarks
Will Cocoa continue to rise?I think so given that the structural changes that led to its surge are still valid, demand is growing and for now there are no valid alternatives.
Maybe we could be in the midst of an ABCD pattern, who knows...
This is how I got in, ideas or advice are welcome.
Greetings
Falling Wedge Pattern: Cocoa FuturesThis is the map of how to trade this rare chart pattern.
This is a textbook sample of Falling Wedge continuation pattern that played out with impressive accuracy.
We have a strong uptrend in 2024 that has been changed
by a large consolidation that took place for the rest of 2024
as it has built the large Falling Wedge (continuation) pattern.
One should focus on the following crucial points and measurements:
1. breakout point where price rises above trendline resistance
it acts as a buy entry trigger (green segment)
2. stop loss - it is located below the lowest valley preceding breakout (red segment)
3. widest part of the pattern - use it to measure the distance to the target adding it to breakout point (blue arc)
4. target (yellow dashed segment)
all of above key parameters are highlighted on the chart.
It's amazing how accurately the price grew towards the target booking over 60% profit.
Next time you can use this map as a guidance.
Can One Bean's Rally Reshape Global Markets?The extraordinary trajectory of cocoa in 2024 has rewritten the commodities playbook, outperforming traditional powerhouses like oil and metals with a staggering 175% price surge. This unprecedented rally, culminating in record prices of nearly $13,000 per metric ton, reveals more than just market volatility—it exposes the delicate balance between global supply chains and environmental factors.
West Africa's cocoa belt lies at the heart of this transformation, where Ivory Coast and Ghana face a complex web of challenges. The convergence of adverse weather conditions, particularly the harsh Harmattan winds from the Sahara and widespread bean disease, and the encroachment of illegal gold mining operations, has created a perfect storm that threatens global chocolate production. This situation presents a compelling case study of how localized agricultural challenges can cascade into global market disruptions.
The ripple effects extend beyond just chocolate manufacturers and commodities traders. This market upheaval coincides with similar pressures in other soft commodities, notably coffee, which saw prices reach forty-year highs. These parallel developments suggest a broader pattern of vulnerability in agricultural commodities that could reshape our understanding of market dynamics and risk assessment in commodity trading. As we look toward 2025, the cocoa market stands as a harbinger of how climate volatility and regional production challenges might increasingly influence global commodity markets, forcing investors and industry players to adapt to a new normal in agricultural commodity trading.
COCOA SHORTCocoa started a correction on Wednesday, after going parabolic.
It is doing an ABCD pattern, with "C" giving us a point for defining a bearish trendline.
The target is "D", 11,147.
A solid close 4H above the trendline, would invalidate this trade idea.
WHAT'S FLOWING: METALS | FX | CRYPTOS | COMMODITIESXPDUSD (Palladium): Bearish outlook. The chart indicates potential resistance around the current price levels, suggesting a downward move may be in play.
AUDCHF: Bullish. Positive price action with upward momentum signals the potential for gains, as AUD strength seems to dominate CHF.
CADCHF: Bullish. Similar to AUDCHF, CAD is showing strength against CHF, pushing higher and creating opportunities for bullish plays
GBPAUD: Bearish. GBP appears to be under pressure against AUD, with price action leaning towards a decline, signaling a potential short opportunity.
JPN225 (Nikkei): Bullish. Japan's index is holding strong and showing signs of further upside, making it a favorable option for long positions.
LNKUSD: Bullish. Link (Chainlink) is experiencing upward momentum, making it a strong candidate for a continuation in price appreciation.
XLMUSD: Bullish. Stellar Lumens (XLM) is also looking strong, with buying pressure indicating potential gains in the near term.
CCZ2024 (Cocoa Futures): Bearish. Cocoa futures seem to be in a downtrend, with bearish signals suggesting lower prices ahead.
Cocoa Crisis 2024 skyrockets prices, outperforming S&P500
The price of cocoa has risen 130% this year, making it the most revalued commodity, surpassing even copper. There are two times of the year when cocoa is harvested, and poor rains and crop diseases have dented the crop in Côte d'Ivoire and Ghana, responsible for more than half of the world's cocoa supply, pushing prices higher.
The latest estimates from the International Cocoa Organization (ICCO) point to a shortfall of 462,000 metric tons, with demand exceeding supply. This is the third upward revision to the shortage this year, driven by adverse weather conditions and persistent demand for chocolate.
Cocoa, which touched an all-time high of $11,800 per tonne in March, is threatening to break above $10,000 again, reflecting a tense and tight market. The cocoa rally not only eclipses other commodities not only food commodities but also some metals such as copper or aluminum, but also outperforms the major stock market indices. This year, the orange is up 55%, a far cry from the 130% rise experienced by cocoa. It is eclipsing the performance of the S&P 500, the world's benchmark index, which has shown a return of around 23% in 2024.
Looking at the chart it can be seen that currently the checkpoint zone (POC) is located around 7660 points and the RSI is located in the middle zone slightly overbought at 51.88%. Seeing the falling formation since April, with two successful attempts to pierce the 8697 points range in May. If this psychological zone is pierced we could see a climb towards highs accompanying the previously mentioned shortage news in a year with many price convulsions.
Ion Jauregui - ActivTrades Analyst
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COCOA LONGCocoa (ICE) price oscillated in a rectangular pattern. Price finally made a breakout, after the breakout the price retraced because it hit the 61.8% golden ratio Fibonacci level (not plotted in this chart), then continued its path upwards.
After measuring the rectangle height, I projected it to define a possible target of 9636 or so.
Then I corroborated this with an ABCD pattern projection, of CD being 161.8% of BC, and having a target of 9636 too.
The Cocoa price can now fall as fast as it rose in six months.The Cocoa price tripled in six months from autumn 2023 to February 2024. So what now? Some have predicted that the Cocoa price will continue to skyrocket? Probably not..
The Cocoa price can now fall as fast as it rose in six months.
Technical Analysis of Cocoa Futures:
If we first look at the short-term picture now for Cocoa futures, then the course is moving within a right-angled descending triangle formation, which indicates further decline going forward both in the short and medium term for Cocoa Futures.
There is now resistance around the USD 8,600 level (cf. chart) and the technical picture signals decline from this level, and a new test soon of the now important technical support level around USD 6,800.
Should there be a break down from the aforementioned right-angled descending triangle formation, and a break down below the now very important technical support level around USD 6,800.
Yes, then a strong technical sell signal will be triggered for Cocoa Futures, which then, and according to the long-term trend (cf. weekly chart) will then be able to fall all the way down towards the lower trend line in the long-term rising trend, and down towards around USD 3,700 (cf. weekly chart).
Important technical levels to watch in the near term for Cocoa futures are whether there should be an established break above the USD 8,600 level, or whether there should be an established break below the USD 6,800 level.
These are two important technical levels now in the short term to keep an eye on for Cocoa Futures, and an established breach of one of these two now important technical levels, yes it will help give new signals about the further development going forward for Cocoa Futures .
As the overall technical picture for Cocoa Futures looks as of today, it is indicated that Cocoa Futures will fall back into the previous uptrend, and have a strong correction down towards the support level at the lower trendline in this long-term uptrend.
That would mean a strong correction down from the current level for Cocoa Futures at USD 8,560 and down towards USD 3,700.
Macro Monday 50 - The Ivory Coast~The Cocoa Centre of the WorldMacro Monday 50
The Ivory Coast ~ The Cocoa Centre of the World
This week we will look at the investment opportunities presenting in the Ivory Coast which is the world’s largest producer of cocoa. This booming economy is expected to continue grow at a 6.6% GDP growth rate which competes with the likes of India (covered on a previous Macro Monday). Today we will cover the Ivory Coast Stock Index - the BRVM Composite Index, the cocoa futures market and also a little history on the west African region. We will also learn a little about the uniqueness of the cacao tree.
All of this information is valuable to anyone considering investing in the cocoa markets, the Ivory Coast or West Africa. If you’re an investor seeking unique commodity exposure or seeking to plant some seeds in a sprouting economy, you’ve come to right place. I will also review cocoa through a commodity lens and why many factors present cocoa as a unique trading opportunity and a commodity worth keeping an eye on.
The West Africa’s produce 70% of global Cocoa
Currently 70% of the world’s cocoa beans are produced in West Africa by the Ivory Coast, Ghana, Nigeria and Cameroon. If you ate chocolate this week, it very likely came from one these countries.
The Ivory Coast produced 2.2 million tons of cocoa in 2022 accounting for over 30% of the global supply of cocoa, making it the largest cocoa producer in the world. In the 2023/24 cocoa season this reduced to 1.8 million tons.
Also known as Côte d’Ivoire, the Ivory Coast is joined to the east by the world’s 2nd largest cocoa producer Ghana, which produced 1.1 million tons of cocoa in 2022 (approx. 20% of the global supply). In the 2023/24 season this reduced to 820,000 tons.
The recent decline of cocoa production from the two largest producers indicates the 2024 season could spawn a supply shock in cocoa, increasing the value of the commodity. Many factors have caused this decline in production some of which we will discuss later in this article.
Other notable cocoa producers include Indonesia (667,000 tons), Ecuador (337,000 tons), Brazil, Peru, and the Dominican Republic. Together, all the countries combined with the aforementioned Ivory Coast and Ghana contribute the majority of the world’s cocoa supply.
Cocoa is essential to the chocolate industry as are other products derived from cocoa beans. The production and trade of cocoa are vital for the economies of these countries, providing income for millions of small farmers and workers involved in the cocoa supply chain. Agriculture in these regions are driving major financial interest. Banks and telecommunications firms are growing rapidly, and all from producing one of the worlds most desired foods.
Top 6 Exports from the Ivory Coast
Ivory Coast’s main exports and their values in USD billions based on the most recent data from 2023:
1. Cocoa Beans: $3.33 bln
2. Gold: $2.12 bln
3. Rubber: $2.11 bln
4. Refined Petroleum: $1.88 bln.
5. Cocoa Paste: $1.08 bln.
6. Fruits and Nuts (incl cashews & coconuts): $1.2 billion.
The Ivory Coast Economy is in Growth mode
The GDP growth for Ivory Coast in 2024 is expected to be robust. According to the International Monetary Fund (IMF), the country’s GDP growth is forecasted at 6.6% for the year. This positive outlook is consistent with Ivory Coast’s trend of strong economic performance in recent years. The growth is driven by a diverse economy with strong sectors such as agriculture, manufacturing, and services, contributing to its status as one of the leading economies in the West African region.
The French Connection
In case you’re wondering in, 1893 Ivory Coast was made a French colony. In 1904, Ivory Coast became part of French West Africa. During World War I and World War II, Ivorian soldiers fought for France. The Ivory Coast is a Francophone country, and in 2024, French is spoken by 10 million people out of 28.9 million (33.61%). Abidjan is the city with the third biggest French speaking population anywhere in the world. It is also the fourth most populous city in Africa, with about 4.7million people living there. In international relations, Françafrique (English pronunciation: Frawn-sah-frique) is France's sphere of influence (or pré carré in French, meaning 'backyard') over former French and (also French-speaking) Belgian colonies in sub-Saharan Africa.
At present Côte d'Ivoire is Frances leading trading partner in the CFA franc zone (WAEMU countries) and the third-largest in sub-Saharan Africa, after South Africa and Nigeria. France is Côte d'Ivoire's second-largest trading partner after China. As you can see, the Ivory Coast has very strong trading ties in Europe.
Demographic Snapshot - Ivory Coast
The population is c. 30 million with a median age of 19 years old. 60% of the population are under the age of 25 (as of 2020 figures) presenting a very young work abled demographic.
Ivory Coast’s Booming Stock Market in 2023
The Ivory Coast had a booming stock market in 2023 and the country as a whole appears to be presenting great economic strives and monumental investment potential.
Lets have a look at the Ivory Coast Stock Index.
The Ivory Coast Stock Index - The BRVM Composite
The Bourse Régionale des Valeurs Mobilières (BRVM) is the regional stock exchange of the member states of the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. I have provided a map on another platform of these countries of which the link in is my profile.
BRVM Composite Components
The BRVM Composite is made up of 46 stocks with 39 of these companies based in the Ivory Coast and 7 based in neighboring countries. Many of the companies operate through individual subsidiary’s in each of the WAEMU countries. The Ivory Coast index provides an interesting mix of growth stocks in the Banking, cocoa production and manufacturing alongside other fruit and nuts, gold mining, telecommunications and tourism. The country is commodity rich and has the workforce to produce at scale.
The BRVM trades in the West African CFA franc, which is usually abbreviated as XOF. This currency is used by the countries in the West African Economic and Monetary Union (WAEMU), providing a stable and uniform platform for financial and economic activities within the region.
The BRVM experienced a remarkable year in 2023, with a notable performance that saw the share price of eight stocks climb into double digit figures. Additionally, the stock market’s total value made a historic leap, surpassing the CFA franc 8 trillion threshold (equivalent to approximately $13 billion USD) for the first time ever in Sept 2023.
The BRVM Composite top 5 companies by Market Cap
1.Sonatel, AKA Societe Nationale des Telecom has a market cap of CFA 1.93T ($3.2 billion USD). Accounts for approx. 20% of the entire BRVM Stock Exchange equity market.
-A major player in the telecommunications sector in West Africa, providing a range of services including fixed-line telephony, mobile communication, internet, and television.
2. Orange Côte d’Ivoire has a market cap of CFA 1.73T ($2.9 billion USD) is listed on the BRVM Stock Exchange under the ticker symbol “ORAC”. Also accounts for approx. 20% of the BRVM.
-Orange Côte d’Ivoire is a subsidiary of the French group Orange and is a leader in telephony in Côte d’Ivoire, offering fixed, mobile, and internet services, as well as mobile payment services with Orange Money.
3.Societe Generale de Banques has a market cap of CFA 631 billion ($1 billion USD)
-A subsidiary of the French multinational bank Société Générale, it offers a wide range of banking products and services to individuals, corporations, institutions, and professionals in Ivory Coast.
4.Ecobank (ETI) has a market cap of CFA 396 billion ($636 million USD)
-Also known as Ecobank Transnational Inc. (ETI), it is a pan-African banking conglomerate with operations in 33 African countries. It serves both wholesale and retail customers and is a leading regional banking group in West Africa and Central Africa.
5.Coris Bank has a market cap of CFA 328 billion ($525 million USD)
-This is the second-largest banking group in Burkina Faso, providing retail, corporate, and Islamic banking services. It also offers a variety of banking products and services, including e-banking and foreign exchange.
As you can see in terms of USD these companies are only sprouting and have a lot of growth potential. These companies are obviously benefiting from major agricultural and infrastructural growth in this blooming economy.
Now onto the chart.
The BRVM Composite Chart is presently not available on Trading View however you can view it on Investing.com. When it becomes available here I will share it.
✅The smooth moving average on the chart is the 200 day SMA (or the 40 week moving average) which appears to have acted as float for price and is sloping upwards with diagonal support.
✅We can clearly observe an ascending triangle also which suggests much higher prices are plausible.
⬜️ At present this chart is not available on TradingView (even though it is powered by TradingView on another platform). I have requested it to be added to allow us to structure a trade more systematically. If it is added I will share the chart on TradingView so that we can monitor it more closely and create and interactive chart to track.
Now lets take a look at the Cocoa Futures chart.
Cocoa Futures Chart (ticker: ICEUS:CC1! )
This is the Subject Chart Above at the heading of the artical.
The cocoa futures chart is trending strongly bullish.
✅We have found support off the 21 week SMA (blue line) several times since 2022 and we can expect this to continue with such a bullish trend in place.
☑️In the event price closes below the 21 week we can then start looking for a sizable correction down to $6,545. Outside of this, the chart is looking great.
✅IMO the most likely outcome is for the price to blast on up to an all-time high or consolidate sideways until the end of the Sept 2024, after which we would likely have a DSS Bressert cross and continue to move higher. Consolidation after a 375% + increase in price since Jan 2023 would be fairly standard procedure. This includes the scenario of a fall to $6,545 which I would still consider a consolidation move, however I find this less likely of an outcome.
Many factors are driving the price of Cocoa up, we will look at some key factors and concerns in the cocoa market below.
The Cacao Tree Requires a Specific Climate to Grow
Cacao is cocoa in its raw, less-processed form. Cacao grows from trees called Theobroma cacao. Cacao trees are native to South America, West Africa, and some countries in Asia. Its quite incredible how the plant can only thrive in very specific regions called Equatorial Zones.
The 3 main species of Theobroma Cacao prefer an equatorial-humid climate, with nearly year-round constant specific humid temperatures. The areas are often coastal or have coastal drafts, have low elevations and super dense humidity. The Cacoa Tree doesn’t mind the heat as much as Coffee Arabica, but it absolutely needs nearly super-saturated water vapor in the atmosphere to survive. The cacao leaf is not very glossy, so if the air is too dry, it will lose all of its water to the detriment of its fruit.
Roughly 35 cacao seeds are generated from each hanging fruit which is then fermented and roasted to create our beloved chocolate taste. This process can take a few days to a number of weeks. The raw form of cacao is much more bitter and can be difficult to eat, albeit I recently discovered it is a great coffee replacement. Interestingly, Both are the seed of a fruit — the coffee "cherry" and the cacao pod that contains 35seeds or beans. While much of chocolate's flavor is developed during a lengthy fermentation process, for coffee, a short fermentation has less impact on flavor and is more a means of separating the seed from the fruit. Both Coffee and Cocoa offer natural stimulants; caffeine for coffee and theobromine for Cacao.
The main Cacao crop growing season is from Oct - Mar (yielding c.80% of annual produce) and the secondary season is May to Aug which yields c. 20%. At present a tree virus is causing significant issues reducing crops by up to 50%, we will discuss this below.
Cocoa Virus Killing up to 50% of Cocoa trees
Unfortunately, a rapidly spreading virus threatens the health of the cacao tree and the dried seeds from which chocolate is made, jeopardizing the global supply of the world's most popular treat.
As noted above, about 50% of the world's chocolate originates from cacao trees in the West Africa countries of Ivory Coast and Ghana. The damaging virus is attacking cacao trees in Ghana, resulting in harvest losses of between 15 - 50%. Spread by small insects called mealybugs that eat the leaves, buds and flowers of trees, the cacao swollen shoot virus disease (CSSVD) is among the most damaging threats to the root ingredient of chocolate.
"This virus is a real threat to the global supply of chocolate"
Benito Chen-Charpentier (professor of mathematics at The University of Texas at Arlington and an author of "Cacao sustainability)
Ghana has lost more than 254 million cacao trees in recent years, and the best measures to address the virus are an expensive vaccine (heightening cost) that renders a smaller plant (reducing yield). Farmers are attempting to separate the plants by greater distances however, this results in a similar issue with lessor plants and reduced supply/returns.
In summary the virus could cause a major global cocoa shortage causing a major supply shock to the cocoa industry, even the news of this event could cause the value of cocoa to rise. Combine this with the secondary season ending in Aug 2024 poorly, and we are setting up for a cocoa shortage coming into the cocoa demand Christmas season.
Ivory Coast and Senegal Clear Leaders in West Africa
Finally, I wanted to recognize that the Ivory Coast is not on their own and many of the countries around them are also thriving. The Ivory Coast and Senegal both play significant roles in the West African Economic and Monetary Union (WAEMU). The Ivory Coast is often considered the powerhouse of the union, contributing a substantial portion of the region’s GDP. It is the driving economy within WAEMU, with a notable share of the nominal GDP of the zone. On the other hand, Senegal is recognized as the second-largest economy in the WAEMU area and has been making strides in economic growth and development through initiatives like the Emerging Senegal Plan (PSE). While Dakar, Senegal, hosts the Central Bank of West African States (BCEAO), which is crucial for the financial stability and monetary policy of the WAEMU, the Ivory Coast’s economic weight within the union is also significant. Therefore, both countries can be seen as key financial centers in their own right within the WAEMU context, with the Ivory Coast leading in economic size and Senegal in its strategic role hosting the BCEAO.
The Hunt for West African Brokerages
I am in the process of hunting for safe and reliable brokers in the Ivory Coast and West Africa’s region. I have found some but I could not recommend them until I do some testing and get some opinions. If anyone has any information on this, I would be very happy to have it and share it with the community here. In any event, I will look for easier indexes also that include exposure to the these countries and to Cocoa.
Interactive Charts on TradingView
All these charts are available on my Tradingview Page and you can go to them at any stage over the next few years press play and you'll get the chart updated with the easy visual guide to see how Ireland's stock market has performed. I hope its helpful.
I wrote this and consumed a whole bar of 85% Lindt Chocolate….hard to believe the journey it took to reach here.
Thanks again for coming along,
PUKA
