Cocoa for delivery in March stood at $11,954 per metric ton on Friday, which represents an increase of almost 185% so far this year, according to Dow Jones Market Data, cited by Marketwatch. According to Friday’s preliminary readings, bitcoin’s nearly 128% and S&P 500’s nearly 25% gains this year pale in comparison to this data.
Cocoa appears to be the commodity that has risen the most this year, even more than the US stock market and bitcoin, as prices of the main ingredient in chocolate have more than doubled in 2024 to reach a new record this month.
And the rebound shows few signs of ending, as the 2023-2024 cocoa marketing campaign has ended with the largest global supply shortfall in 60 years, according to ING.
Cocoa for delivery in March stood at $11,954 per metric ton on Friday, which represents an increase of almost 185% so far this year, according to Dow Jones Market Data, cited by Marketwatch. According to preliminary readings on Friday, bitcoin’s nearly 128% and S&P 500’s nearly 25% gains this year pale in comparison to this data.
In the opinion of Darin Newsom, market analyst at Barchart, the cocoa situation has not changed much since the beginning of the year, and the key factor remains the adverse weather in Côte d’Ivoire, located in West Africa.
Preliminary data on Friday shows that other “sensitive” commodities – mainly those that are grown – are among the big 2024 winners in the sector, with futures prices for frozen concentrated orange juice rising nearly 75% and of coffee almost 73%.
Extreme weather conditions
For James Roemer, editor of the WeatherWealth newsletter, the record warming of the oceans “has worsened the already delicate situation of West African cocoa crops, affected by two years of extreme weather conditions.”
Wet October weather has again damaged cocoa trees in some areas of West Africa and, more recently, there have been hot, dry Harmattan-type winds, which do not usually occur when La Niña is weak, it notes in a recent bulletin .
“Harmattan” refers to the dry winds that form over the Sahara and La Niña is a weather pattern that describes the cooling of surface ocean waters off the Pacific coast.
Earlier this year, cocoa saw a drop from the April high to the October low, according to Barchart’s Newsom, and that appears to be a “normal seasonal movement,” given that harvest typically begins in October. Once 2024 supplies started arriving, the market reacted to the “reality of a smaller crop, leading to new highs recorded this month.” Cocoa futures have gained almost 27% so far this month.
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The International Cocoa Organization forecast a global cocoa production shortfall of 478,000 metric tons for the 2023-2024 season, which was extended until the end of September, according to a report from late November. review Banking and Business.
In year-on-year terms, it predicts that global production for the season will decline by 13.1% and that stocks at the end of the campaign will fall by 26.8%.
Cocoa, at historic highs
Typically, the weather becomes favorable for cocoa again when La Niña forms, Roemer said. The US National Oceanic and Atmospheric Administration said in mid-December that La Niña conditions were most likely to appear between November of this year and January 2025.
However, the warming global climate and tight cocoa supplies have “painted a ‘cautiously’ favorable sentiment on this market over the past two months,” Roemer said, with cocoa prices trading near their all-time high.
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