Cocoa futures topped $11,0000 as traders monitored crop conditions in Ghana and the Ivory Coast’s key growing areas. A strengthening US dollar capped the agricultural commodity’s performance, leaving the bean still in the red this year.
July cocoa futures rose $128.00, or 1.17%, to $11,102 per metric ton at 12:36 GMT on Tuesday on the US ICE Futures exchange. Cocoa has risen 11% over the last week and is up 22% in the last month. This year, cocoa has slumped around 4%.
A new report from Rabobank suggests that the Ivory Coast’s mid-season crop is poor in quality due to rainfall arriving later than expected, which has limited crop growth. The country’s cocoa harvest is estimated to be down 9% from last year, totaling approximately 400,000 metric tons.
Still, according to Barchart, Ivory Coast farmers have shipped 1.53 million metric tons, up nearly 12% from a year ago.
Recent data indicate that US inventories have improved from a two-decade low, surpassing 2.1 million bags.
On the demand front, chocolate maker Hershey reported waning consumer demand as sales tumbled 14% in the first quarter. The company also forecasts that it will face up to $20 million in tariff costs during the second quarter, forcing the company to raise chocolate prices.
Nestle USA also said it plans to raise prices on some of its US chocolate products amid higher tariff-related commodity costs.
From Bloomberg News:
“The US division of Nestle SA, the world’s largest food company, will raise prices of its Toll House morsels, baking cocoa and fudge kits starting June 23, according to a memo viewed by Bloomberg News.
The hikes follow letters sent from the company at the end of last year to some of its commodity suppliers in which Nestle asked them to reduce prices, provide rebates and in some cases even cancel supply contracts altogether, according to people familiar with the matter who asked not to be identified because the information is private. Some suppliers declined to do so, according to the people.”
Mondelez International has also said it anticipates enduring weaker-than-expected first-quarter sales as consumers reduce their snack purchases.
The US dollar was up as much as 0.2% on Tuesday but pared some gains. The US Dollar Index (DXY), a measure of the greenback against a weighted basket of currencies, was little changed at 100.40. A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreigners to purchase.
In other agricultural commodities, July corn futures rose $0.065, or 1.45%, to $4.54 per bushel. July wheat futures added $0.0975, or 1.84%, to $5.3875 a bushel. July soybean futures were flat at $10.515 per bushel. July coffee futures rose $0.11, or $0.004, to $3.751 per pound. July orange juice futures were flat at $2.52 per pound.