Cocoa Futures Surge Amid Production Concerns
Cocoa futures have reached their highest level in over seven months, propelled by concerns over production in West Africa, which could impact global supplies amidst low inventory levels. The most-active cocoa contract experienced a surge, climbing as much as 5.4% to $10,380 a ton, marking its highest point since April 29.
This rally returns cocoa prices to earlier highs this year, driven by challenging weather conditions in Ivory Coast and Ghana, the leading cocoa producers.
Steve Wateridge, head of research at TRS by Expana, noted a recent decline in production outlook: “The outlook for the mid-crops has deteriorated in the past weeks.” He emphasized that weather conditions over the next three months are critical in determining if the situation will worsen.
The main cocoa-growing regions in West Africa are currently experiencing the Harmattan season, characterized by dryness that depletes soil moisture and adversely affects crops.
Maxar Technologies Inc., a weather forecasting company, reported that the lack of soil moisture and minimal rainfall are not conducive to crop growth during the middle of the year. This has raised concerns among market participants about the potential tightening of cocoa supplies.
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