General view of cocoa pods on a tree in Ephebda, November 30, 2024. Cocoa is one of Cameroon’s main exports.
Daniel Bellumu – The Best of Daniel Bellumu | Afp | getty images
The price of a key ingredient in chocolate has soared this year, prompting analysts to issue new warnings of extreme price volatility.
New York cocoa futures Contracts for March delivery rose as much as 1% to $11,938 per metric ton on Tuesday, hitting another record high. It later pared some of its gains and was trading at $11,864 around 8:20 a.m. ET.
The benchmark contract, which hit an intraday high of $11,925 in the previous session, is up more than 180% so far this year.
It comes amid renewed concerns about poor weather and supply shortages in West Africa, where about three-quarters of the world’s cocoa is produced.
Strategists at Dutch bank ING said prices were likely to remain volatile into next year due to continued pressure in cocoa and coffee markets and weather uncertainty.
ING said in a research note citing data from the International Cocoa Organization (ICCO) that the global cocoa market recorded its largest deficit in more than 60 years in the 2023-2024 marketing year. The report attributed the shortages to crop failures in Côte d’Ivoire and Ghana, the world’s largest cocoa producers.
“The outlook for the 2024/25 marketing year looks good, but there are still concerns about the weather situation in West Africa and what this could mean for production this season,” said Warren Patterson, head of commodities strategy at ING. . December 11th
“Current forecasts show a slight rise in West African production, which accounts for more than 70% of global production, but recent adverse weather conditions pose a risk to this,” he continued.
Prices are likely to remain historically high next year “to keep down demand,” Patterson said.
Commodity markets still ‘very risky’
Like cocoa, coffee prices also It also surged in 2024, with analysts recently warning that it could take years for one of the world’s most traded commodities to recover.
Rabobank’s Carlos Mera singled out cocoa and coffee as commodities of interest to professional traders, but warned that commodity markets were still “very volatile” and “very risky.”
An employee prepares chocolate drinks for a customer at Katherine Anne Confections, an artisan chocolate shop and cafe, on February 2, 2024, in Chicago, Illinois.
Scott Olson | Getty Images News | getty images
“(Cocoa) is one of the least-known commodities, so I wouldn’t advise anyone who doesn’t know to go in there, but it’s definitely one of the most fun commodities to look at,” Mera told CNBC’s “Squawk Box Europe.” . On Tuesday.
“And coffee, there’s another surge. Coffee hit its highest price since 1977. (And) depending on which contract you look at, this could be a historic record or a record robusta price. It’s a pretty interesting situation.” He added.
