The market is being rattled by poor crops in key West African growers that has put the world on course for a third straight annual supply deficit.
The industry is grappling with the legacy of poor returns paid to cocoa farmers and fears are mounting about being able to source enough beans.
Futures jumped as much as 4.5 per cent to $US10,080 a tonne in New York on Tuesday – a level that seemed unthinkable only a few months ago. The rally has pushed a technical gauge of prices into overbought territory for much of the last couple of months, though cocoa has continued to soar. There’s a risk the supply situation may worsen. Incoming European Union rules – aimed at stopping products that destroy forests from being sold in shops – may make it even harder for the bloc’s chocolate makers to secure supplies.Focus is now turning to West Africa’s upcoming mid-crop, the smaller of two annual harvests. Top grower Ivory Coast’s regulator expects that to shrink this season, Bloomberg has reported.
A ratio of stockpiles-to-grindings will fall to the lowest in more than four decades this season, the International Cocoa Organisation has forecast, reflecting the market’s precarious position.
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