Cocoa prices rose to new all-time highs on Thursday and have been climbing since January.
Inputs that matter: Due to extreme shortages, there are growing concerns that West African cocoa suppliers may default on supply contracts.
- Ghana is the largest producer of cocoa in the world.
- Bloomberg reports that the Ghana Cocoa Board is negotiating with significant cocoa traders to postpone the delivery of at least 150,000 MT of cocoa until next season due to a lack of beans.
The opportunity: Blue Line Futures Chief Market Strategist Phillip Streible explains that cocoa price increases are "a combination of things that won't get resolved anytime soon."
- According to Bloomberg, the disappointing harvests from the Ivory Coast have attracted new investment to ramp up cocoa production in Brazil, the previous world leader.
Zoom in: The International Cocoa Organization (ICCO) is an intergovernmental organization comprising cocoa-producing and cocoa-consuming countries.
- The London-based ICCO was created in 1973 after the first United Nations International Cocoa Conference, which created an international agreement for the commodity trade.
- The current agreement has been in effect since 2012.
- As Brazil increases production with the support of other BRICS nations, a new ICCO agreement may be reached soon.
Between the lines: Godiva's parent, London-based Plaids Foods Chief Executive Officer Salman Amin, describes ongoing "geopolitical disruptions" creating broader supply chain challenges and says the company is looking at ways to manage them and hedge risks.
- Yahoo! Finance reports, "Cocoa prices have more than doubled this year, surpassing $10,000 a ton."
- "The rally has been driven by a third year of shortages of cocoa beans from West Africa, the world's top growing region, as climate change and crop disease ravage trees."
Follow the money: Barchart details, "A negative factor for cocoa was last week's action by the Ivory Coast government to boost farm-gate prices for cocoa producers by 50% for mid-crop beans."
- "Smaller cocoa exports from Nigeria, the world's fifth largest cocoa producer, are bullish for prices after Nigeria's Feb cocoa exports fell -18% y/y to 26,103 MT."
- "As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market," the ICCO said.
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Read More
- https://fred.stlouisfed.org/series/PCOCOUSDM
- https://www.barchart.com/futures/quotes/CCN24
- https://banananomics.co/cocoas_meteoric_rise
- https://finance.yahoo.com/news/price-godiva-chocolate-boxes-going-100000502.html
- https://www.barchart.com/story/news/25335759/cocoa-prices-underpinned-by-global-supply-woes
- https://www.cnbc.com/2024/03/26/cocoa-prices-hit-10000-per-metric-ton-for-the-first-time-ever.html