Tuesday, February 27, 2024
30 C
Brunei Town

Cocoa price soars to highest in decades

NEW YORK (BLOOMBERG) – Cocoa surged to the highest level in over 40 years as global shortages boost costs for chocolate makers.

Futures traded in New York jumped as much as 2.5 per cent to the highest for a most-active contract since 1979. Behind the gains are forecasts for poor crops in top growers Ivory Coast and Ghana just as demand is signalling an improvement.

“The supply and demand situation remains bullish,” Jack Scoville, a vice president for Price Futures Group in Chicago, said in a report.

Cocoa for December delivery surged to USD3,786 a metric tonne in New York, the highest since January 1979. The price exceeded an earlier peak reached in March 2011, when civil war in Ivory Coast resulted in a cocoa export ban. The key chocolate-making ingredient has surged more than 40 per cent this year, the biggest gain among the key US-traded commodities.

Bean deliveries to ports in Ivory Coast are about 16 per cent behind this season, according to a person familiar with government data. Analysts are expecting a third consecutive deficit for the key chocolate ingredient.

All of that is happening as a strong El Niño threatens to bring dryness to West Africa, further hurting crops. Demand is also improving, with bean processing in Europe turning out better than expected. Ivory Coast and Brazil are also boosting grindings.

Previously, supply shortages drove up cocoa prices back in the 1970s, with the commodity reaching a peak of USD5,379 a tonne in July 1977, according to data compiled by Bloomberg.

The cocoa rally has been noted by cookie and candy makers. Oreo maker Mondelez International Inc cited cocoa as one of a number of commodities with rising prices in the first half of the year. Hershey Co Chief Financial Officer Steve Voskuil said in April that “cocoa and sugar in particular are moving in the wrong direction.”

“We do expect to see potentially more impact in ’24 than ’23, but we’ll see how the markets play out,” he added.

Cocoa. PHOTO: ENVATO
spot_img

Latest

spot_img