The continent last year ground 1.46 million tons of cocoa beans into butter and powder for confectionery products, which is a 6.1% rise, the most in data that goes back to 1999. That follows a jump in Asian processing, and North American figures are due. Cocoa futures extended a rally as a result.
It’s “further proof that consumers have found their sweet tooth during the pandemic,” Charles Branch, head of softs and agricultural commodities at Britannia Global Markets in London, said by email.
The strong demand is eroding stockpiles in Europe and U.S. with prohibitive freight and fertilizer prices imposing cost headwinds. Surging energy prices are also fueling inflationary pressures.
March futures jumped as much as 1.9% to $2,680 a ton, bringing year-to-date gains to nearly 6%. The number of outstanding contracts jumped during the latest rally, a bullish sign of renewed investor interest. The prices are also up as part of a broad rally in commodities.
Nevertheless, traders are keeping an eye on how new lockdowns may impact demand. Also, unseasonal beneficial rains in top shipper Ivory Coast may boost supplies.
In other markets, coffee, sugar, cotton and orange juice also advanced in New York. The futures were helped by a stronger Brazilian real, which erodes incentives for the agricultural powerhouse to sell commodities priced in the greenback. Adverse dryness in key South American growing areas are also fueling jitters about yields, following devastating losses last year.
Cotton rose 1.8% to $1.2331 a pound, after touching a fresh decade high of $1.2387. Tight supplies and concerns about the outlook for the upcoming crop in the U.S., the top exporter, are weighing on prices, with troubles in Asia compounding concerns.
While there had been early expectations for an increase in American fiber sowing for 2022-23, Citigroup Inc. said in a report that those could drop given soaring fertilizer prices. Drought in the biggest U.S. grower, Texas, is also feeding worries about output in the year ahead.
For sugar, exports out of India may be volatile as prices have fallen below breakeven levels for farmers. A government subsidy last season propped up the markets there, and now that’s ended, said Michael McDougall, managing director for Paragon Global Markets.
