Cocoa futures eased from their all-time highs on Tuesday as investors may have taken some profits. The agricultural commodity has soared in recent weeks, posting fresh record highs on tight global inventories and solid global demand. Can cocoa touch $7,000 this month?
May cocoa futures dipped $22.00, or 0.34%, to $6,428 per metric ton on Tuesday on the US ICE Futures exchange. Cocoa prices reached a record high of $6,586 per metric ton to start the first full trading week of March. Year-to-date, cocoa has rocketed 53%. The crop has also spiked 131% over the last 12 months.
Market analysts say that cocoa prices have been finding support in a recent industry report highlighting an immense supply deficit coming.
According to the International Cocoa Organization (ICCO), the international shortfall could widen to 374,000 metric tons in the 2023-2024 marketing season. This is worse than the previous year’s deficit of 74,000 metric tons.
The ICCO further forecasts that global cocoa output will plunge by 11% year-over-year to 4.45 million metric tons in the upcoming season.
Industry observers have been observing the situation in West Africa, with various shipments and output expected to decline in the coming months.
Ivory Coast, the world’s largest producer, recorded a year-over-year decrease of 30%. Nigeria’s exports tumbled 15% year-over-year. Ghaha slashed its production estimate to a 14-year low of 650,000 metric tons.
Weather conditions have weighed on the sector as dry and hot temperatures have decimated production volumes. Additionally, a crop disease has resulted in abysmal output.
Experts purport that the only solution to record high cocoa prices will be a drop in global demand. Industry leaders have already seen a drop in cocoa consumption in North America, Asia, and Europe based on various reports.
In other agricultural markets, April corn futures shed $0.04, or 0.93%, to $4.26 per bushel. April wheat futures slumped $0.1225, or 2.17%, to $5.5175 a bushel. April soybean futures dropped $0.06, or 0.52%, to $11.49 per bushel.