A general view of cocoa pods on a tree, in Ebebda, on November 30, 2024. Cocoa is one of Cameroon’s most important export products.
Daniel Beloumou – The Best of Daniel Beloumou | Afp | Getty Images
The price of the main ingredient of chocolate has exploded This prompted analysts to once again warn of extreme price volatility.
Cocoa futures for March delivery in New York was trading 1% higher at $11,938 a ton around 7:10 a.m. ET on Tuesday, hitting another record high.
The benchmark contract, which hit an all-time intraday high of $11,925 in the previous session, is up over 180% year-to-date.
This comes amid renewed concerns about adverse weather conditions and supply shortages in West Africa, home to around 100,000 people three quarters global cocoa production.
Strategists at Dutch bank ING said The ongoing tension in the cocoa and coffee markets as well as weather uncertainty meant that prices were likely to remain volatile next year.
The global cocoa market recorded its largest deficit in over 60 years in the 2023-2024 financial year, said a research note citing ING Data from the International Cocoa Organization (ICCO). She attributed this deficit to crop failures in Ivory Coast and Ghana, the world’s largest cocoa producers.
A worker prepares a flight of drinking chocolate for a customer at Katherine Anne Confections, an artisan chocolate shop and cafe, on February 2, 2024 in Chicago, Illinois.
Scott Olson | Getty Images News | Getty Images
“While the outlook for the 2024/25 marketing year looks brighter, there are still concerns about weather developments in West Africa and what it could mean for production this season,” Warren Patterson, head of commodities strategy at ING, said in a published note Dec 11
“Forecasts currently show that West African production – which accounts for more than 70% of global production – will increase slightly. However, there are risks due to recent bad weather,” he continued.
Looking ahead, Patterson said prices will likely remain at historically high levels next year, which will be necessary “to keep demand under control.”
“One of the most entertaining goods”
Like cocoa, Coffee prices have also rose sharply in 2024with analysts recently warning that one of the world’s most traded commodities could take years to recover.
Carlos Mera from Rabobank highlighted cocoa and coffee as commodities of interest to professional traders.
“(Cocoa) is one of the most unknown commodities, so I wouldn’t advise anyone who doesn’t know about it to get into it, but it’s certainly one of the most fun commodities to look at,” Mera told CNBC.Squawk Box Europe” on Tuesday.
“And then there is another increase in coffee. Coffee has reached its highest price since 1977 (and) depending on which contract you look at, it could be a historic record and also record Robusta prices… It’s a pretty interesting situation,” he added.
