Global cocoa prices have hit record highs due to fears of tight supply and adverse weather conditions in West Africa, the world's largest cocoa producing region. The situation is raising concerns about further price volatility in the chocolate market.
The price of chocolate's key ingredient has skyrocketed this year, prompting analysts to issue fresh warnings about extreme price volatility. Cocoa futures for March delivery in New York traded 1% higher at $11,938 per metric ton at around 7:10 a.m. ET on Tuesday, notching yet another record high. It comes amid renewed concerns over adverse weather conditions and supply tightness in West Africa, home to around three-quarters of the world's cocoa production.
The benchmark contract, which hit an all-time intraday high of $11,925 in the previous session, is up over 180% year-to-date. Persistent tightness in cocoa and coffee markets, coupled with weather uncertainty, meant that prices were likely to remain volatile through next year. The global cocoa market registered its largest deficit in over 60 years in the 2023-2024 marketing year, ING said in a research note, citing from the International Cocoa Organization (ICCO). It attributed this shortfall to crop failures in Ivory Coast and Ghana, the world's largest cocoa producers. While prospects for the 2024/25 marketing year are looking better, there are still concerns over weather developments in West Africa and what it could mean for output this season, Warren Patterson, head of commodities strategy at ING, said in a note published Dec. 11. Forecasts currently show that West African output – which accounts for more than 70% of global output – will edge higher. However, there are risks to this due to recent poor weather
COCOA PRICES SUPPLY CHAIN WEST AFRICA CHOCOLATE INDUSTRY
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