Cocoa and its parabola
May 3, 2024 Leave a comment
Cocoa prices have fallen 40% over the past 2 weeks.
#Cocoa ($7,070) is no longer more expensive (per metric ton) than #Copper ($9,700)
May 3, 2024
Cocoa still more expensive than Copper
April 19, 2024 Leave a comment
Just a reminder that the metric price per ton of Cocoa ($10,895) is still more expensive than the metric ton of Copper, which is trading at $9,800.
While you can recycle copper, it’s supply is tempered because amongst other things, it can take 10+ years to bring a new mine into production.
Cocoa, on the other hand, is “replenished”. There are 2 harvests per annum.
April 19, 2024
Mean reversion beckons for NVDA and Cocoa
March 26, 2024 Leave a comment
The two most notable parabolic price moves in recent times is being seen in the price of Cocoa and NVIDIA shares.
Both prices are trading at stratospheric percentages above their 200 week moving averages.
Cocoa is trading 3.5 standard deviations above its rolling monthly mean and even more astonishing, at US$9,950 per ton, it is more expensive than Copper which is trading at US$8,870 per ton.
Mean reversion or mean convergence?
Gravity is real.
Parabolic Cocoa
March 16, 2024 Leave a comment
The parabolic move of the year (so far) goes to Cocoa.
Historically, such parabolas are usually thumped and mean reversion is honoured quickly.
The most recent #parabolic price moves were seen in Natural Gas and Wheat in the earlier phases of the Russian/Ukrainian War.
The attached monthly chart goes back to 1984.
The Empirical Rule states that 99.7% of data or prices observed following a normal distribution lies within 3 standard deviations.
Today, #cocoa is at 3.5 standard deviations.
While the upward move is astonishing, but I do wonder, with such probabilities, who is buying Cocoa at such prices?
Other extremes are seen in the distance above moving averages and the width of the Bollinger bands.
In the meantime, the stock prices of Hershey, Nestle and Barry Callebaut are wallowing at their recent lows.
March 16, 2024
by Rob Zdravevski
rob@karriasset.com.au
Cocoa is trading in rarefied air
June 12, 2023 Leave a comment
It was 9 years when the price of Cocoa last registered a Monthly overbought reading.
This is the 5th time this has occurred over the past 45 years.
While Cocoa also appears in my recent edition of Macro Extremes which observes ‘weekly’ timelines, this Monthly moment is something to note.
This doesn’t mean speculators necessarily initiate ‘short’ positions but it should motivate growers and wholesalers to lock in forward pricing and it’s a warning flag for long side momentum traders and industry buyers.
But when such an event occurs, it soon after bodes well for the accumulation of securities in those who make chocolate such as Nestle, Barry Callebaut and Lindt & Sprungli.
Inversely, you’d think that the rising price of Cocoa would crimp the margins of confectioners and it may have, although higher costs (aided by shrinkflation) do get passed on.
After all, chocolate is an addition.
At such a juncture, investors and companies now begin to anticipate that the cost of such a major input will peak.
Incidentally, 6 weeks ago, I wrote this note about Sugar (the other major input) which was/is also trading at simultaneous weekly and monthly extremes.
June 12, 2023
by Rob Zdravevski
rob@karriasset.com.au
rob zdravevski's blog 