Cocoa powers toward $10,000 as shortages drive relentless rally
Cocoa climbed near an unprecedented $10,000 a ton in New York as a global shortage rattles the market and raises the cost of chocolate.
Futures have more than doubled this year to an all-time high as poor crops in key West African growers put the world on course for a third straight annual supply deficit. The market is grappling with the legacy of poor returns paid to cocoa farmers and fears are mounting about being able to source enough beans.
That’s bad news for consumers if chocolatiers keep passing on higher costs or sell bars that are smaller or which have less chocolate in them. The looming Easter holiday is a peak period for chocolate consumption, and the lag between commodity and retail markets mean the brunt of the impact for shoppers still lies ahead.
Futures climbed as much as 3.2% to $9,962 in New York on Tuesday.
The rally has pushed a technical gauge of prices into overbought territory for much of the last couple of months, though cocoa has continued to soar.
Focus is now turning to West Africa’s upcoming mid-crop, the smaller of two annual harvests. Top grower Ivory Coast’s regulator expects that to shrink this season, Bloomberg has reported.
“The West African supply situation remains extremely tight going into the start of the mid-crop harvest next week, and that continues to underpin cocoa prices,” The Hightower Report said in a note.
