Cocoa prices eye $10,000 again on growing market tightness
Cocoa futures eyed $10,000 per metric tonne yesterday as market tightness continued to support the agricultural commodity.
The ascent in cocoa prices had stalled entering June, but the bean has since enjoyed a resurgence amid various industry-related developments.
July cocoa futures advanced $280, or 2.90%, to $9,939.00 per metric ton at 13:22 GMT on Tuesday on the US ICE Futures exchange. Cocoa prices are coming off a weekly dip of 1%.
However, cocoa is still up 35% over the past month and has rocketed 136% year-to-date. Over the last 12 months, cocoa prices have soared 216%.
While there had been some profit-taking last week, prices reaccelerated on news that Ivory Coast, the world’s top cocoa producer, had suspended forward sales for next season’s crop.
Additionally, the West African nation has suspended purchases and exports for June and could extend the suspension.
Meanwhile, the cocoa regulator in the Ivory Coast intends to institute a series of reforms in the domestic cocoa marketing system.
Ghana, the world’s second-largest cocoa producer, plans to delay the delivery of up to 350,000 tons of cocoa next season due to deteriorating crop conditions.
Over the past year, cocoa prices have soared on a broad array of factors, such as disease, market speculation, and weather.
The other issue has been that cocoa farmers have failed to invest in their land, resulting in lower crop output.
The worldwide deficit is expected to balloon to 439,000 tons for the 2023-2024 marketing season amid slowing production and intact grindings.
This has been an ongoing issue for global cocoa markets, leading to retail challenges.
“While the 2023/2024 crop in West Africa declined, we are encouraged by the growth in other regions around the world and steps being taken in West Africa to improve supply,” said Hershey CEO Michele Buck in last month’s corporate earnings call.
“Farmer prices have increased, which should enable them to make more investments in fertilizer, pesticides, and other techniques to improve yields.”
In other agricultural commodities, July corn futures rose $0.0275, or 0.62%, to $4.465 per bushel.
July wheat futures tumbled $0.035, or 0.59%, to $5.88 a bushel. July soybean futures picked up $0.0425, or 0.37%, to $11.62 per bushel.
July orange juice futures tacked on $0.038, or 0.89%, to $4.33 a pound.
fxdailyreport.com
