Chocolate is set to get more expensive as cocoa prices soar to seven-year highs. Cocoa price has risen by almost 30% in 2023.
Commodity – Cocoa Price Chart 2023
Introduction:
As cocoa prices continue to soar and the industry faces
supply concerns, many are wondering if cocoa is a good investment choice. In
this article, we will examine the factors driving the cocoa market and explore
the potential opportunities for investors.
Record Trading Volume and High Participation:
According to reports, the first half of 2023 witnessed a
record number of cocoa futures and options traded, indicating strong customer
engagement. Cocoa futures hit successive volume and open interest (OI) records,
reaching a record high of 1.4 million contracts on June 29, 2023. Furthermore,
participation in ICE’s New York and London Cocoa contracts is at its highest
since 2018, with record participation in ICE’s London Cocoa markets in June.
Supply Concerns and Demand Increase:
Persistent concerns of low supply from the world’s top cocoa
producers have contributed to the upward momentum of cocoa prices.
Above-average rain in the Ivory Coast and poor weather conditions in Ghana have
flooded plantations and hurt crop prospects, leading to a supply deficit. The
International Cocoa Organization forecasts a global supply deficit of 142,000
tonnes, more than twice the previous estimates. On the demand side, leading
companies like Hershey and Mondelez have experienced a surge in demand,
supported by the reopening of the global economy and growing middle class in
countries like China and Indonesia.
Market Performance and Predictions:
Cocoa prices have reached a 7.5-year high, hovering above
$3,300 per tonne. The price increase has been significant, with cocoa trading
~36% above the lowest level in 2022 and ~93% higher than its 2018 lows. This
surge in prices is attributed to ongoing supply and demand imbalances in the
industry. However, factors such as ageing cocoa farms, climate change, and
long-term buying contracts of major chocolate companies impact the market
dynamics.
Market Analysis and Potential Opportunities:
From a technical perspective, cocoa prices have shown a
strong bullish trend, breaking important resistance points and indicating
potential for further price gains. Traders should be aware of the possibility
of short pullbacks before the continuation of the bullish trend. The market
dynamics make cocoa an attractive option for investors looking to capitalize on
short-term and long-term price movements.
Conclusion:
As cocoa prices reach new highs and supply concerns persist,
investing in cocoa presents an interesting opportunity. Factors such as supply
deficits, increasing demand, and technical indicators support the potential for
further price gains. However, it’s essential for investors to consider the
unique market dynamics and factors that can impact cocoa prices. By staying
informed and understanding the risks and opportunities, investors can make
informed decisions in the cocoa market.
Disclaimer: The information provided in this article is for
informational purposes only and should not be considered as financial or
investment advice.
Virgin Galactic, the groundbreaking space tourism company,
has been capturing the attention of traders looking to harness short-term
profit opportunities. The company has been in business for over 20 years, and
it has recently made significant progress in developing its technology.
In 2021, the company successfully completed its first
commercial spaceflight, and it is now preparing to launch more flights in the
near future.
In this blog, we will explore the reasons why Virgin
Galactic can be a valuable option for short-term trading, allowing traders to
capitalize on its potential for rapid price movements and market sentiment.
Trading Opportunities:
Currently, with its low price and ability to react swiftly
to positive news, Virgin Galactic has become an enticing choice for those
seeking profitable short-term trades.
Three main reasons why Virgin Galactic
could be a good trading opportunity:
1. The company’s stock
price is very low.
2. There is a lot of
potential for short-term gains if there is any good news about the company.
The low price of Virgin Galactic’s stock could make it a
valuable choice for short-term trading. If the company announces any positive
news, such as the successful completion of another commercial spaceflight, its
stock price could go up significantly. However, it is important to remember
that short-term trading is a risky activity, and the stock price of Virgin
Galactic could go down when there is negative disclosure.
For short-term traders who are adept at capitalizing on
market dynamics and have a high tolerance for risk, currently, the low price of
Virgin Galactic shares can present enticing. Short-term traders who can
navigate the volatile nature of the stock may be able to capitalize on positive
news catalysts, such as successful test flights, regulatory approvals, or
high-profile partnerships. Especially when it has successfully completed a
commercial spaceflight, its stock price could go up significantly.
By staying abreast of the company’s developments and
carefully monitoring market sentiment, traders may find opportunities to profit
from short-term price movements.
Virgin Galactic’s stock price reached historical low below
$3 on April 6, 2023.
In June, the stock price of Virgin Galactic experienced a remarkable surge of over 80%, skyrocketing from $3.5 on June 1, to $6 on June 20, subsequent to the company’s late May announcement of their inaugural paid space tourism flight. Virgin Galactic has officially commenced commercial spaceflight service on June 15, 2023, with the first paying customers set to fly in August.
Virgin Galactic’s SpaceShipTwo vehicle is designed to carry
six passengers and two pilots to an altitude of over 50 miles, where they will
experience a few minutes of weightlessness and stunning views of Earth. The
entire spaceflight experience takes about 90 minutes. Virgin Galactic is
currently accepting reservations for spaceflights, with tickets starting at
$450,000. The company has sold over 800 tickets to date.
Compare to its historical high of $52 in 2021, there is a
lot of room for speculation and upside in stock prices.
Volatility as an Advantage:
Virgin Galactic’s stock has exhibited notable volatility
since its IPO, presenting traders with ample opportunities to profit from
short-term price swings. The stock’s propensity for sharp rises and falls can
create an ideal environment for traders to enter and exit positions swiftly. By
closely monitoring the company dynamic and leveraging technical analysis
techniques, traders can potentially identify advantageous entry and exit points,
maximizing their chances for profitable trades.
Catalysts for Price Movements:
Virgin Galactic’s stock price is highly responsive to
significant news events, making it an attractive choice for short-term traders.
Positive developments such as successful test flights, new partnerships, or
regulatory approvals often trigger rapid price surges. Traders who keep a close
eye on the company’s announcements and developments can position themselves to
take advantage of these catalysts. By staying informed and acting swiftly,
traders can ride the momentum created by positive news and potentially generate
substantial profits.
Technical Analysis Opportunities:
Virgin Galactic’s price chart provides ample opportunities
for traders to apply technical analysis strategies. The stock’s frequent price
swings, combined with identifiable patterns and indicators, offer traders a
framework for making informed trading decisions. Whether utilizing chart
patterns, trend analysis, or oscillators, technical analysis can aid traders in
identifying potential entry and exit points, optimizing their chances for
profitable trades in the short term.
Short-Term Trading Strategies:
Short-term traders have the opportunity to utilize a diverse range of strategies to take advantage of the price volatility exhibited by Virgin Galactic. One effective approach is day trading, which involves opening and closing positions within a single trading session. Given the stock’s low price, traders can leverage their positions and execute trades in both directions, aiming for higher profitability if the trade moves in their favor. By carefully selecting the most suitable strategy and adapting it to the prevailing market conditions, traders can align their trades with the stock’s price behavior and potentially generate consistent profits.
Long-Term Investment Risks:
Despite the allure of space tourism, Virgin Galactic has yet
to generate substantial revenue or turn a profit. The company’s shares soared
following successful test flights or positive announcements, only to plummet
when faced with setbacks or delays. Such unpredictable swings can be
detrimental to long-term investors seeking stability and consistent growth.
Conclusion:
Virgin Galactic’s stock offers an enticing opportunity for
short-term traders looking to capitalize on rapid price movements and market
sentiment. Its volatility, coupled with catalysts for price swings and
technical analysis opportunities, creates a favorable environment for
profitable trades. However, it is essential for traders to approach short-term
trading with diligence, employing risk management techniques, setting clear
profit targets and stop-loss orders, and being prepared to adapt swiftly to changing
market conditions. While short-term trading in Virgin Galactic may present
profitable opportunities, it is important to remember that it carries inherent
risks and should be approached with caution. By leveraging the stock’s
potential and applying sound trading strategies, traders can unlock valuable
short-term trading opportunities within the dynamic landscape of Virgin
Galactic.
Following President Erdogan’s victory in the election, the
Turkish Lira has experienced a significant decline in value. This blog explores
the factors contributing to the depreciation of the Turkish Lira, why veteran
traders are able to capitalize on these opportunities, and the importance of
knowledge in understanding and leveraging such market dynamics.
The Depreciation of the Turkish Lira:
The Turkish Lira has witnessed a decline against major
currencies, particularly the US dollar. It has reached record lows, with
exchange rates nearing 19 and even approaching 20 Lira per dollar. This
volatility has raised concerns among investors and triggered intense market
speculation. Since 2021, the US dollar against the Turkish Lira has nearly
tripled, rising from 7.4 to 19.8.
Factors Contributing to the Depreciation:
Several factors have contributed to the depreciation of the
Turkish Lira, including economic instability, political uncertainties,
geopolitical tensions, and inflationary pressures. These elements have created
a challenging environment for the Turkish economy, eroding confidence in the
Lira and resulting in capital outflows.
Economic Instability and Geopolitical Tensions:
Political uncertainties, trade disputes, and regional
conflicts have heightened market volatility, impacting the value of the Turkish
Lira. Veteran traders have closely monitored these developments, recognizing
the potential for profitable trading opportunities amid the market turbulence.
Inflationary Pressures:
High inflation rates have eroded the purchasing power of the
Turkish Lira, leading to depreciation. The Turkish economy has faced persistent
inflationary pressures, requiring intervention from the central bank to
stabilize the currency. Experienced traders have utilized inflation data to
inform their strategies and capitalize on price movements.
Economic Reforms and Structural Challenges:
Structural challenges within the Turkish economy, such as a
large current account deficit and heavy reliance on external financing, have
added to the volatility of the Turkish Lira. Economic reforms aimed at
addressing these challenges have been implemented, but their impact takes time
to materialize. Veteran traders, equipped with thorough analysis and
understanding of these reforms, have positioned themselves to seize trading
opportunities arising from the currency’s fluctuations.
Seizing Trading Opportunities:
While humanitarian aid has poured into Turkey, veteran
traders have also recognized the significant depreciation of the Turkish Lira
in recent years. Leveraging their experience and expertise, these seasoned
traders have made profitable investments amidst the currency’s fluctuations.
However, many individuals may have missed out on capitalizing on these
opportunities due to a lack of understanding and awareness.
Conclusion:
To trade USD/TRY successfully, continuous learning and
staying informed about market knowledge and awareness are essential. By
understanding market dynamics, monitoring economic developments, and gaining
expertise in analyzing factors influencing the Turkish Lira’s performance,
traders can position themselves to seize potential opportunities and navigate
the complexities of the global currency markets.
So, do you want to learn how to trade USD/TRY and make
predictions about its future direction?
The US
dollar is currently experiencing a surge in popularity, presenting both risks
and opportunities for investors. One way to track the value of the dollar is
through the U.S. Dollar Index (USDX), an exchange-traded fund that measures its
strength against a basket of six major foreign currencies.
How
Strong Is the Dollar?
The US
Dollar Index compares the dollar’s value to the euro (EUR), Japanese yen (JPY),
British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK), and Swiss
franc (CHF). As of May 17, here is how the dollar stands against these
currencies:
EUR/USD:
One euro is equivalent to $1.09, down from $1.10 on May 4, 2023.
USD/JPY:
One dollar is equivalent to 136.36 yen, up from 134.27 yen on May 4, 2023.
USD/CHF:
One dollar is equivalent to 0.89 Swiss francs, up from 0.88 francs on May 4,
2023.
GBP/USD:
One British pound is equivalent to $1.24, down from $1.25 on May 4, 2023.
USD/CAD:
One dollar is equivalent to C$1.35, with minor fluctuations since May 4, 2023.
Over the
past 2 weeks, the US dollar has generally gained strength against most major
currencies.
Looking
forward, the strength of the dollar will likely be closely tied to US inflation
and interest rates, according to Quincy Krosby, LPL Financial’s chief global
strategist.
Debt
ceiling stalemate
However,
recent concerns about the US debt ceiling have impacted the dollar’s
performance. Safe-haven demand due to a slowing Chinese COVID recovery and an
unexpected rise in US consumer inflation expectations boosted the dollar last
week. Yet, the focus has shifted to the looming borrowing limit, which Treasury
Secretary Janet Yellen has warned could be reached as early as June 1.
Investors are eagerly awaiting news from Washington on how the debt ceiling
issue will be addressed, as failure to resolve it could lead to a US government
debt default.
Emerging
markets
Meanwhile,
in emerging markets, the Turkish lira has seen a significant decline, nearing a
record low, as weekend elections appear headed for a runoff. On the other hand,
the Thai baht has rallied following a more decisive election result.
In
conclusion, the US dollar’s current trend is marked by its strength against
major currencies, influenced by factors such as inflation, interest rates, and
the looming debt ceiling issue. Monitoring these developments is crucial for
investors as they assess the risks and opportunities presented by the US
dollar’s performance.
When you check market news, you notice how prominently information about indices figures in any market update. Before you are briefed about the prices of individual companies’ shares, you hear about the movement of major indices. As of writing, for example, indices are on the rebound, spurred by a reversal in the bank selloff. After a slide, the S&P 500 snapped back and celebrated its second straight week of gains. The NASDAQ 100 edged 0.3% higher, while the FTSE is above its recent lows, brought up by the BoE’s 25 basis point rate hike.
The questions are what this information means and why it is
crucial for the markets and the global economy. However, before we try to
answer them, the explanation of what indices are is in order.
What Are Indices?
A stock market index measures a section of the stock market.
It tracks the performance of a specific group of stocks, bonds, or other
investments. These stocks, bonds, or investments are often grouped around a
particular industry, such as the tech, pharmaceutical, or automobile
industries. The NASDAQ is tech-heavy, and when major tech companies listed on
it take a plunge, it slips, too.
Often, these industries are gathered around the stock market overall, as is the case with the S&P 500 and the Dow Jones Industrial Average. Indices are not equal in size: the Dow Jones features only 30 stocks; the FTSE 100 consists of the largest 100 qualifying UK companies, while the CRSP index contains more than 3,700 stocks. But all indices do include a sufficiently large sample size of companies to represent the overall behavior of the economic section.
How Are Indices Constructed?
How do the indices choose companies or other instruments to
include? Or put differently, what criteria should companies satisfy to qualify
for inclusion? There is no single propriety formula embraced by all existing
indices. Each stock market index chooses its standards to put companies
on its list.
Some indices include only those companies that rank highly in terms of market capitalization or in terms of the total value of all their outstanding shares. In this case, large companies have a more substantial impact on the index’s performance. Tesla, listed on the NASDAQ, had a market cap of $602.47 billion in March 2023. If the price of its stock sinks, it will pull the index deeper down than will the dropping Ericsson, whose market capitalization is now $189.16 billion.
Indices also differently determine how included companies are
represented; that is, they assign a different weight to them. Depending on
weighing, all companies listed on an index can have an equal impact on index
performance or a different impact. This impact is based on market
capitalization or share value.
If an index assigns an equal value to all included companies, they will affect its performance with an equal force, regardless of their price, size, or market value. The S&P500 Equal Weight Index (EWI) is the equal-weight version of the S&P 500. Each company in the S&P EWI is allocated a fixed weight or 0.2% of the index total at each quarterly rebalance. On this index, companies influence its performance in an equal measure, whether they are large or small.
Stock market indices can also be price-weighted. Such indices give each company a different weight, depending on the current price of its share. Companies with larger share prices have more influence on an index’s overall direction, regardless of their size. The most popular price-weighted stocks are the Dow Jones Industrial Average (DJIA) and the Nikkei 225. Microsoft, included in the Dow Jones, will move the index more than Intel Corporation, also listed there, because its current price is $280.96, much higher than Intel’s $29.39.
Why Are Indices Important?
If you want to understand the state of a country’s equity
market, look no further than its indices. Indices and their movements provide
insights into the economy, investors’ risk appetite, and the trends for
investing. Studying stock market indices will help you make intelligent
investment decisions. You should also analyze indices to manage your portfolio
smartly. Indices are deeply integrated into the business of investment
management. Funds use indices as benchmarks to make comparisons between
companies’ performances.
How to Invest in Indices?
Indices measure the performance of a group of companies and
investments. Therefore, funds based on leading indices are a recommended way to
invest quickly, efficiently, and potentially profitably. Index funds and ETFs
give access to a diversified portfolio of stocks and bonds and might be an
excellent investment for trading novices and experienced investors. Investing
in index funds and exchange-traded funds can be done with any amount of money
and with any brokerage. If you want to try to put your money in indices, talk
to Xtrade’s experts. They will ensure that your investment in indices brings
profits.
People
readily invest in gold, considering it a shelter in difficult economic times.
Silver is popular, too, because, like gold, it holds its value better than
other assets during inflation. Yet gold and silver are not the only profitable
metals you can trade. If you are interested in trading commodities, especially
natural resource commodities, you can put your money in base metals. Although
not as expensive as gold and silver, base metals – copper, nickel, zinc, lead, and
iron – serve numerous commercial and industrial purposes and may bring you
lucrative profits.
What Are Base Metals?
The concept of “base metals” may sound derogatory, especially alongside the term “precious metals.” Compared to the precious and rarer metals gold, silver, and platinum, base metals are more commonly found in the depths of the earth. They are also much easier to mine than precious metals, so they are rated less expensive for manufacturing. However, base metals are not worthless even if they lose compared to gold, silver, and platinum. They are invaluable to the global economy because of their utility and ubiquity.
Indeed, base metals are employed in many commercial and industrial spheres for numerous purposes. Think of copper plumbing, aluminum cans, and the steel necessary for manufacturing vehicles. Nearly ubiquitous and easily mined, base metals cost far less than their precious and rare earth peers. As of writing, the gold spot is trading at $1,817.25 per ounce; platinum’s price is $959.21 per ounce. Copper is up to $402.35. The prices of base metals respond to changes in demand for the products for which the metals are used.
Copper has
an additional function lacking by other base metals. Investors look to copper
prices to understand how healthy the global economy is because it is widely
used in construction. Its prices are used as a significant indicator of global
economic growth. Analysts say that if demand for copper is increasing and
prices are surging, the global economy might be improving. A decline in the
price of copper may alert investors to a slowdown in the economy or, at least,
prompt the thought that economic activity is slowing down in essential areas of
the economy.
How to Invest in Base Metals?
If you
consider investing in base metals, you can participate in the base metals
market in several ways. You can invest in individual companies that
specialize in base metals production. Statista provides a list of the major
base metal-producing companies worldwide, which you may address when deciding
where to put your money. For instance, you may invest in GlencoreXstrata,
producing copper, nickel, zinc, tin, lead, and cobalt; or Freeport – McMoRan,
dealing with cooper; or BHP Billiton, participating in the production of
copper and nickel. RioTinto, producing copper, is also a good
choice, as are Norilsk Nickel specializing in nickel and copper, steel
company US Steel, and aluminum company Alcoa. In addition to
investing in individual companies, you may try your hand at trading futures and
options contracts of individual metals. Go to CME Globex, a trading system
providing global connectivity to the broadest arsenal of futures and options
across all asset classes, and trade copper futures (HG) and options (HX).
Another variant is to turn to base metal exchange-traded funds (EFTs) found in a wide variety worldwide. You may make a deal at the Invesco DB Base Metal Fund, comprising futures contracts on zinc, copper, and aluminum. Or you may contact the SPDR S&P Metals & Mining ETF, which consists of companies involved in the mining and metals industries. There is also the iShares US Basic Materials ETF, including companies producing basic materials.
How to Invest in Copper?
Copper enjoys popularity and is known to people more than other base metals because of its wide range of applications. Copper is used in wiring, plumbing, electronics, and coinage. This base metal is referred to as an indicator of the health of the global economy. As the economy worldwide has lately been unstable, the price of copper has experienced highs and lows, swayed by trade tensions between China and America, supply shortages, and the war between Russia and Ukraine. As the pandemic began to subside, copper jumped to an all-time high of above $10,700 per tonne. As copper might experience a supply deficit, Goldman Sachs predicts its prices will soar to $9,750 in 2023, with the average price climbing to $12,000 by 2024. There are reasons to expect copper to beat its all-time high record next year.
You may
invest in copper as you invest in other base metals. Choose either copper
futures or copper exchange-traded funds (ETFs), or copper stocks. Many major
miners deal with copper: Codelco, Glencore, PHP Group, Freeport – McMoRan,
Grupo Mexico, Teck Resources, Southern Copper, Rio Tinto,
and Antofagasta. There is also a rich arsenal of smaller companies
engaged in copper production, including ATEX Resources, Barksdale
Resources, NGEx Minerals, Los Andes Copper, and Amarc Resources.
Base metals might be cheaper than their precious peers and are not deemed a safe haven in troublesome economic times. But they are indispensable in many industries and often boast unique properties absent in other metals. Nickel is the major component of stainless steel, whereas zinc is included in galvanizing steel as a protection against corrosion. Copper goes into wiring and coinage. These unique qualities, together with their comparatively low prices, recommend base metals as investment assets.
