Cocoa Prices Traded above the Key Support Level


Jan. 29 2016, Updated 2:08 p.m. ET

Trend in cocoa prices

March cocoa prices were trading near the crucial support of $2,800 per metric ton on January 26, 2016. Prices were under pressure due to favorable weather conditions and supply for the near term. Prices were on a downward channel. They held the key support of $2,750 per metric ton on January 26. The volume for the contract rose by 33.8% after falling for two consecutive days. More price anticipations project that the level could be challenged.

The above chart suggests that prices could be $2,750–$2,880 per metric ton in the short term.

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Price drivers

The weather conditions in southern Asia were favorable due to rain on January 26. The favorable weather conditions should continue. The speculation of more convenient output from Brazil supported cocoa prices on January 26. Despite stronger factors that supported the supply, cocoa prices rose on the day.

Stocks review

Food and beverage companies would gain from lower cocoa prices because it would reduce their cost. Businesses like Dean Foods (DF) and Mondelez International (MDLZ) recovered from a fall the previous day. They rose by 3.2% and 2.8% on January 26, 2016. Prices of Starbucks (SBUX) recovered from the fall of 2.5% the previous day. It rose by 1.6% on January 26, 2016. On January 26, shares of Hershey (HSY) rose by 1.6%. It fell by 1.7% the previous day. The iShares MSCI Brazil Index (EWZ) rose by 1.7% on January 26, 2016.


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