Cocoa Price Trends Down

Cocoa futures have continued their downward trend this week, falling to their lowest level since mid-May. This decline is attributed to speculative long position liquidations following a significant drop in value last week and commercial and fund selling.

Factors influencing the market:

  • Favorable weather conditions in West Africa: This bodes well for the upcoming 2024/25 crop starting in October, potentially easing supply concerns.
  • Tight market conditions: Despite the recent price drop, the cocoa market remains tight due to poor crops in Ivory Coast and Ghana. The stocks-to-consumption ratio is expected to reach a record low by the end of the current season.
  • Anticipation of Q2 global demand reports: These reports, due early next month, will provide insights into market demand and could influence prices.
  • Consumer behavior: Rising cocoa prices lead to increased chocolate prices, potentially impacting consumer demand. Nestle SA has indicated that consumers might reduce their chocolate purchases due to these price hikes.

Current prices:

  • Cocoa futures are trading around $7,200 per tonne, marking the lowest point since mid-May.
  • Trading Economics forecasts cocoa to trade at $9,731.14 per tonne by the end of this quarter and $11,159.15 per tonne in 12 months.

 

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