Dark times for cocoa as prices hit four-year lows
Choosy and weight conscious consumers and an abundance of crops has hit prices
Cocoa prices are in a meltdown, hitting a four-year low due to an abundant supply and weakening demand as growing health consciousness grips consumers.
Benchmark cocoa futures on the Intercontinental Exchange in New York hit US$2,052 per metric ton on February 3, the lowest level since March 2013, in an extended year-long decline after 2015’s weather-related rally. They closed at US$2,052 per ton on Friday.
A bumper crop last season from benign weather in West Africa is weighing down prices. Ivory Coast and Ghana are the world’s top producers of cocoa beans, accounting for more than two-thirds of global supply.
“The Harmattan season—marked by dry and dusty winds blowing from the Sahara—has been weak this season, and has so far not created much damage to cocoa crops,” said Singapore-based Phillip Futures soft commodities dealer, Wilfred Chong. “Instead, weather conditions are seen to be improving, fuelling the selloff.”
ICE cocoa may fall further, Chong said, pegging support at US$2,000 a ton.
In the largest cocoa producing country of Ivory Coast, beans are piling up at warehouses and ports as exporters who put in bids for the commodity at high prices are now stuck with stock they’re unwilling to sell at a loss, Reuters reported in January.