Cocoa has sustained a price escalation of the last 54 weeks marking a growth of 60.88%, after which a sideways range has formed. Cocoa futures reached a trading high of 6676 points, driven by inflation increases and the Federal Reserve's price tightening, which have caused this incredible upward push in the commodity. Most of the major chocolate companies in the market have increased the prices of their final products with cocoa components in view of the doubling of cocoa prices since last year. Hershey, Toblerone, Mondelez Int. Group (which includes Milka and Cadbury among others), Lindt & Sprungli, Circana and the Walmart supermarket chain, a benchmark for low prices, have decided to raise the cost of all their cocoa products, literally doubling their price.
In the case of Hersey, its sales have fallen 6.6% since last year given the necessary price adjustment and prices are expected to continue to rise. Thousands of videos have been posted on the internet regarding the cost of these types of chocolates, which used to cost 50 cents, now cost more than $2. Many are trying to compensate for the rising cost of cocoa by increasing their efficiency in the forward purchasing strategy. It is very likely that the market for cocoa derivatives will be affected by a drift to a higher milk to cocoa ratio and variety of other lower cocoa products to compensate for these prices.
The technical analysis shows an organized upward price construction since the beginning of February, crossing different price boundaries placing the value between 6676.00 and 5908 points. The current picture suggests a possible consolidation closer to highs in an area that suggests a narrowing at the top. Indicators such as the RSI at 52.91%, indicate a balance in the market, and the MACD showing a possible bullish crossover on volume that is not very strong suggests a possible consolidation to look for highs. However, the formation of a triple bell on the price indicator suggests a weighting towards the middle zone, which could indicate a possible bounce to test lower levels of the range before a continuation to the upside, so it could stretch its price adjustment if it dips to 5595 and subsequently bounce to the upside. Price is expected to break above the triple top and look for all-time highs at 6997 points.
Ion Jauregui - AT Analyst
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
In the case of Hersey, its sales have fallen 6.6% since last year given the necessary price adjustment and prices are expected to continue to rise. Thousands of videos have been posted on the internet regarding the cost of these types of chocolates, which used to cost 50 cents, now cost more than $2. Many are trying to compensate for the rising cost of cocoa by increasing their efficiency in the forward purchasing strategy. It is very likely that the market for cocoa derivatives will be affected by a drift to a higher milk to cocoa ratio and variety of other lower cocoa products to compensate for these prices.
The technical analysis shows an organized upward price construction since the beginning of February, crossing different price boundaries placing the value between 6676.00 and 5908 points. The current picture suggests a possible consolidation closer to highs in an area that suggests a narrowing at the top. Indicators such as the RSI at 52.91%, indicate a balance in the market, and the MACD showing a possible bullish crossover on volume that is not very strong suggests a possible consolidation to look for highs. However, the formation of a triple bell on the price indicator suggests a weighting towards the middle zone, which could indicate a possible bounce to test lower levels of the range before a continuation to the upside, so it could stretch its price adjustment if it dips to 5595 and subsequently bounce to the upside. Price is expected to break above the triple top and look for all-time highs at 6997 points.
Ion Jauregui - AT Analyst
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.