On Wednesday, cocoa crop prices gained advantages from a decline in the dollar index to a 1-1/2-week plunge.
Cocoa futures for July delivery went up by 0.65% to $2,947.00 per metric ton on April 26’s Asian afternoon session.
Last Friday, NY cocoa reported a 6-3/4 year high while London cocoa posted a 6-1/2-month record. Over the past five weeks, the beans’ prices have surged sharply amid better demand and tighter global supplies.
According to analysts, weaker supplies from the Ivory Coast is a good sign for prices. This is after its government announced a drop by -5.00% year-on-year from the 1.89 MMT of the commodity. Besides, the Ivory Coast is the top producer globally.
Moreover, hints of improved cocoa demand are bullish for prices. For instance, the National Confectioners Association grindings jumped by 2.40% month-on-month but dropped by -4.40% YoY to 109,666.00 MT. Last Thursday, the Cocoa Association of Asia mentioned that grindings increased by 4.09% YoY to 222,028 MT.
The beans have support from forecasts from the International Cocoa Organization (ICCO) that global 2022/23 inventories would fall by -3.50% YoY to 1.65 MMT.
Also, issues about West African crop quality have limited plunges in the commodity’s costs. Furthermore, farmers continue to have difficulties with a shortage of fertilizer and pesticides due to the effects of the Russia-Ukraine war.
Dark Chocolate Market Helps Cocoa Price Growth
The dark chocolate market is forecasted to grow between 2022 and 2027, causing a great demand for cocoa beans.
However, the volatility in raw material prices created obstacles to market growth. Cocoa is the most essential ingredient in making dark chocolate. Nonetheless, the price of these beans is high. In addition, making cocoa butter is a complex and expensive process.
The dark chocolate market is expected to rise by $45.78 million in the following years. It is estimated to increase at a 4.97% compound annual growth rate. Still, the unstableness of cocoa prices can cause a significant challenge in the market.