On Friday, cocoa prices increased when the Ivory Coast paused selling contracts for deliveries in the 2023/24 season as farms flooded.
Cocoa futures for September delivery increased by 0.75% to $3,291.50 per metric ton on July 14’s Asian afternoon session.
According to experts, the heavy rains negatively affected the planting areas in the world’s highest-producing nation. While prices are still at record levels amid supply issues, the suspension of sales will weigh on the country.
The US said they depend on cocoa for 40.00% of its delivery earnings. Based on analysts, previous sales reached over a million tons before the suspension. As a result, the total output forecasted for this season was 2.20 million tons.
Moreover, the interruption is a negative factor for buyers, mainly for major commodities trading houses. These include Cargill and Olam and chocolate producers such as Barry Callebaut, Hershey, and Nestle.
Additionally, analysts said the cocoa harvest is bound to begin flowing to ports for exports from October. They added that volumes are estimated to decline considerably.
Some experts anticipate lesser crops in the first part of the primary harvest compared to the current season. Also, they want the January to March production to balance outputs. Failure of balance could lead to potential problems.
Chocolate and Cocoa Markets Fulfill Global Demand
In the past years, the cocoa and chocolate market experienced consistent growth. Based on a report, there is positivity in their supply chain, understanding of raw materials, and buyer distribution.
Also, prices gained support from the ongoing concern of the El Niño weather phenomenon. Besides, it could significantly cut the commodity’s global production.
The global economy’s reopening after the pandemic helped boost chocolate demand. Its dollar sales were up by 10.00% from last year.
Moreover, Euromonitor researchers estimated a higher sale for cocoa confectionary products by 5.80% this year. The jump could reach almost $26.00 billion.
Furthermore, the International Cocoa Organization (ICCO) speculated a global deficit of -146,000 tons. They said the supply deficit is mainly led by weather variations.