On Tuesday, cocoa prices went up, hitting a 12-year high due to the tighter outlook for its futures supplies from the Ivory Coast.
Cocoa futures for its September delivery rose by 2.49% to $3,504.00 per metric ton on July 25’s Asian afternoon session.
The Ivory Coast’s forward sales for October 01 to July 07 declined by -13.30% year-on-year to -1.30 MMT. Also, its regulator mentioned that it could not make upcoming forward crop sales for the 2023/24 export season. As a result, it boosted prices.
On Monday, the commodity found in London posted a 1-1/12 week high. It gained support from the British pound’s weakness. Besides, a weaker pound rate is bullish for the raw chocolate-making ingredient priced in sterling.
Over the past month, the crop’s value rallied due to recent heavy rains dropping in West Africa. As a result, it worsens the spread of black pod disease and causes cocoa pods to blacken and rot. Also, the disease’s spread from the unfavorable wetter weather could lead to poorer crop quality and outputs.
Additionally, lower data on current supplies is positive for prices as the ICE monitored storages in US ports steadily declined. Last Thursday, it went down, reaching a 3-1/2 month low.
On the other hand, more robust cocoa outputs from Nigeria are a disadvantage for prices. Its May exports rose by 65.00% YoY to 20,675 tons.
Chocolate to be Pricier due to High Cocoa Prices
On the bearish side for chocolate fans, confectionery producers are increasing prices since cocoa trades near-decade highs.
Food companies have been struggling with higher costs of chocolate’s primary ingredient. Its value gained over 25.00% annually due to extreme floods in the world’s leading growing areas.
On the other hand, analysts said that sugar, another main ingredient, also became pricier at historically high levels.
In Australia, some cocoa products had a 10.00% to 20.00% price rise. According to analysts, inflation could resume if the cost pressures keep increasing.
They added that global cocoa values have increased since September last year. The global markets could also head towards a third year of the crop’s supply deficit.
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