Concerns that global cocoa supplies will continue to shrink in the coming months are driving prices to new record highs. Analysts at Citi Research expect volatility in cocoa markets could cause New York futures to rise further to $12,500 a tonne over the next three months.
Prices in New York have risen for seven straight sessions, the longest streak since early February. Harvests in the West African growing region have been severely affected by terrible weather and plant diseases.
Bloomberg reported on Monday that cocoa arrivals at the ports of Ivory Coast (the world's largest cocoa producer) have reached 1.31 million tonnes so far this season, down 30% from last year.
bankruptcies
The Citi analysts wrote that increased prices also increase the risk of bankruptcies for traders and buyers in the next six to 12 months.
Barchart.com reports that limited supplies in the spot market mean global cocoa mills are paying to secure cocoa supplies this year, as concerns grow that West African cocoa suppliers may default on their supply contracts.
Market Overview as of Monday, April 15, 2024: ICE NY May Cocoa (CCK24) closed up +14 (+0.13%) and ICE London May #7 Cocoa (CAK24) closed up of +191 (+2.13%).
Bloomberg also reported that the Ghana Cocoa Board is negotiating with major cocoa traders to delay shipments of at least 150,000 to 250,000 tonnes of cocoa until next season due to bean shortages.
As ConfectioneryNews reported, cocoa prices have risen sharply since the start of the year, reflecting the worst supply shortage in 40 years.
Government data from Ivory Coast on Monday showed that Ivory Coast farmers shipped 1.31 MMT of cocoa to ports from October 1 to April 14, down 30% from the same period last year.
Third annual cocoa deficit
The third annual global cocoa deficit is expected to continue into 2023 and 2024 as current production is insufficient to meet demand.
Additionally, cocoa prices are receiving support from the current El Nino weather event, after an El Nino event in 2016 caused a drought that caused cocoa prices to rise to a 12-year high, according to barchart.com.
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