TMN - Cocoa

Cocoa futures slide amid higher inventories

On Tuesday, cocoa futures notably declined, extending their week-long slide, after the ICE reported upbeat inventories.

Futures tied to the commodity lost 2.43% or 59.00 points to $2,373.00 per metric ton, skidding to a rough ten-month low. The contracts also trailed the previous plunge of 1.77% to $2,385.00 per metric ton.

Likewise, the London cocoa inched down 0.06% or 1.22 points to $2,080.84 per metric ton. It followed a slump of 2.40% to $2,132.04 per metric ton, falling to a two-week low.

Accordingly, the prices received a cut after the cocoa inventories posted an increase of 10 1/2-month high of 5.82 million bags.

Another bearish factor for the prices is the broad strength of the US dollar. The greenback recently rose 0.64% to 105.13, hovering over a 19-year high.

Moreover, farmers reported dry conditions in the cocoa-growing region of Ivory Coast, the world’s leading producer of the commodity. Correspondingly, the favorable weather could bolster the quality of the April-to-September crops, indicating better output in the next three months.

The dry environment would prevent the humidity-induced disease that could pester the pods. In line with this, analysts anticipated the mid-crop to have stable produce, noting the good state of the trees.

Additionally, demand concerns weighed on cocoa prices. The North American Confectioners Association stated that the grindings slashed 2.80% to 114,694 metric tons from a year earlier.

Cocoa prices to rebound on fertilizer shortfall

Nevertheless, cocoa prices are still set to rebound as the trade disruptions weighed on the fertilizer trade. Analysts explained that the shortage of soil nutrients could cap the crops.

Another bullish factor for the contracts is the decline of produce in Nigeria, the world’s fourth-largest cocoa producer. The country reported that April exports dropped by 61.00% year-over-year to 12,497.00 metric tons.

Moreover, the ICCO anticipated the annual global 2021/22 pod production to slip by 5.20% to 4.96 million metric tons. The organization also projected the cocoa market to register a deficit of 181,000 MT from the last surplus of 215,000.

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