On Wednesday, cocoa prices increased due to the recent heavy rain in West Africa, which negatively affected crops and slowed harvest.
Cocoa futures for September delivery went up by 0.34% to $3,269.00 per metric ton on June 28’s Asian afternoon session.
The Ivory Coast, the largest crop producer globally, reported lower outputs. Its government said the farmers sent a cumulative 2.22 million metric tons to the ports for the marketing year 2022/23. The volumes were down by -2.20% year-on-year.
Moreover, cocoa prices benefited from weather concerns about the El Niño event that could lessen global production. The US Climate Prediction Center said that sea surface temperatures on the equatorial Pacific Ocean rose above normal levels.
The commodity gained support from signs of more robust global demand. In North America, the National Confectioners Associated stated that its Q1 grindings increased by 2.40% month-on-month. However, it fell to 109,666.00 metric tons.
In Asia, its cocoa association reported a rise in grindings by 4.09% YoY to 222,028.00 metric tons. Furthermore, the European Cocoa Association announced that its Q1 grindings went up by 0.50% YoY to 375,375.00 metric tons.
Additionally, the crop’s prices rallied last month after the International Cocoa Organization said storage would drop. Also, the ICCO noted an expected supply deficit, mainly in West Africa, amid weather variations.
ICCO Warns Consumers About Higher Cocoa Prices
According to the ICCO, the demand could limit price hikes despite the ongoing concerns about cocoa supply supporting prices. Since costs of other ingredients like sugar are jumping and prices are climbing in other areas, confectionery companies could have problems.
Based on its May 2023 report, the organization asked if the event might weigh down on demand and reverse rallies. On the other hand, future reports from significant firms can give insights into how demand will turn out. Data would be based on their chocolate confectionery sector and grindings information.
Moreover, concerns about supply increased due to the recent flooding in some cocoa farms. Analysts said it could negatively affect the main crop from the start of next October to March.