Cocoa Extends Gains After Global Processing Topped Expectations
Cocoa futures climbed to the highest in more than two weeks after key processing data, often used as a proxy for global demand, beat expectations last week.
The most active contract in New York rose as much as 7.1%, adding to last Thursday’s 3.6% gains. That comes as Europe, Asia and North American markets all reported smaller drops in cocoa grinds in the first quarter of the year than analysts had expected.
Europe and Asia figures were released early last Thursday, pushing prices higher, while North American data came after markets closed. Markets were closed on Friday for the holiday.
“The better-than-expected grind number suggests demand has not been as damaged by high prices as feared,” ADM Investor Services analyst Mark Bowman wrote in a note. Meanwhile, a lower US dollar “lends support to commodities like cocoa but, on the other side of the coin, there are still worries that tariffs and a global trade war will hurt demand”, Bowman added.
The Bloomberg Dollar Spot Index, which tracks the US dollar against a basket of other global currencies, fell to the lowest in 15 months on Monday as markets weighed President Donald Trump’s threats to fire Federal Reserve Chairman Jerome Powell.
Expectations of weaker global demand had cooled cocoa prices from last year’s record highs, and hedge funds recently cut bullish bets to a two-year low amid trade risks. Supplies from West Africa had also been improving, helping cocoa processors that struggled to procure enough beans last year and boosting inventories in US exchange warehouses to the highest since late October.
Still, concerns remain that poor weather will impact the Ivory Coast mid-crop harvest that began earlier this month and resilient demand could further pressure supplies still recovering from last year’s record deficit.
