Cocoa futures remain supported amid macros revealing improved economic macros and supply constraints.
At the time of filing this report, U.S Cocoa futures (the contract that prices the physical delivery of exchange-grade product from a variety of African, Asian and Central and South American origins to any of five American delivery ports) traded at $2,375.50 a ton.
Recent price patterns reveal that although Cocoa futures have plunged this year amid the rising dollar, average prices are still about 5% higher at $2,475 a ton from a year earlier.
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Though some commentators anticipate an increase in demand as social mobility improves, market pundits argue that cocoa markets remain in hefty surplus and prices are likely to remain capped until possibly 2022/23.
Cocoa prices will likely remain supported in the mid-term as a majority of Nigerian cocoa exporters who depend solely on imported jute bags to package their cash crop produce, are facing a shortage after production in Asia plummeted due to a surge in COVID-19 cases and factory closures.
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Investors are also weighing on macros that reveal two of the world’s major cocoa-producing countries, Ivory Coast and Ghana, recently threatened to expose chocolate brands that they claim are undermining a program solely based on paying farmers a decent income.
The two countries that account for more than 60% of global output are already battling with chocolate producers over the price of their beans.
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Cocoa farmers are upset that the premium paid by consumers on buying branded chocolates mostly go to these chocolate makers amid macros revealing cocoa buyers demand discounts as bountiful harvests abound.
Though not as significant as Cote d’Ivoire, Nigeria plays a leading role in the cocoa industry globally, covering about 6.5% share of the global production of cocoa. Cocoa is the largest agricultural export of Africa’s largest economy, and integral to its economy.
The bean gotten from the cocoa pod is the major ingredient used for making chocolate and derives from the cacao tree.
