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The recent price activity of Cocoa commodity futures has seen significant movements, reflecting various underlying market dynamics and external factors.

Cocoa Futures Chart

As shown in the above futures price chart, Cocoa prices have surged to record highs, driven by a combination of fundamental and speculative buying.

A recent report highlighted that on a Feb. 21st, March ICE NY cocoa futures closed with a significant increase of 3.32%, while Mar ICE London cocoa futures saw an even more substantial rise of 4.88%. This rally was propelled by the Ghana Cocoa Board’s revision of its 2023/24 cocoa production estimate to a 14-year low, attributing the decrease to smuggling and unfavorable weather conditions.

Ghana, being the world’s second-largest cocoa producer, plays a critical role in global cocoa supply. Additionally, lower cocoa production in the Ivory Coast, which is the world’s largest cocoa producer, further exacerbated the bullish sentiment in the market.

From October 1 to February 18, Ivory Coast farmers shipped 1.12 million metric tons (MMT) of cocoa to ports, marking a 33% decrease from the same period last year, signaling a significant drop in supply.

Cocoa Futures

Further supporting the price rally, a report from Reuters mentioned that cocoa, the main ingredient used to make chocolate, hit its highest price ever, with the March cocoa contract on the Intercontinental Exchange in London reaching a peak of 3,155 pounds per metric ton. This was the highest price since cocoa futures began trading in 1920. The report also highlighted that despite the increasing costs, demand for cocoa beans appears to be holding well.

European third-quarter cocoa processing data indicated a less-than-expected decrease in the amount processed, suggesting that high prices have not yet led to demand destruction.

Other factors contributing to the price increase include slow arrivals of cocoa at West African ports and a global supply balance heading for a third consecutive deficit year, which attracted speculative buying.

Cocoa futures & options

This analysis underscores the complex interplay between supply and demand dynamics, weather conditions in key producing regions, and speculative market activities driving the recent price trends in cocoa commodity futures.

The situation in Cocoa futures prices illustrates the sensitivity of commodity markets to changes in production forecasts and broader economic factors, highlighting the importance of closely monitoring these variables for market participants.

For further details on the information provided, including more in-depth analysis and advice tailored to your individual investment needs, please contact Insignia Futures & Options.

I hope you’ve found this information helpful & informative.

If you have any questions, please leave them in the comments below or feel free to contact me directly – I’ll be happy to help.

Joe Fallico

Principal Futures Broker
Series 3 / Series 30 Licensed

Phone: 1-847-379-5000 – ext. 101

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