Cocoa Surges Back To $10,000 A Ton On Growing Supply Fears

While bean arrivals to ports in top grower Ivory Coast are currently running ahead of last year’s pace, there are fears about the mid-crop harvest. Drier conditions in West Africa could hurt prospects for that cycle which starts in April, according to weather forecaster Maxar Technologies Inc.

That would tighten supplies in a market already grappling with a huge 2023-24 season deficit seen at 478,000 tons, according to the latest data from the International Cocoa Organization. Bean stockpiles in the US have continued to shrink, reaching the lowest since 2004, as companies faced with higher prices drawdown inventories.

Traders like Pierre Andurand have also been increasingly bullish on cocoa, citing a market in structural deficit following consecutive bad harvests and dwindling stockpiles in consuming countries.

“With the current rally barely a year old and supply headwinds likely to worsen for at least four years, the stage appears set for cocoa prices to reach new inflation-adjusted highs,” Andurand, whose hedge fund holds positions in the cocoa market, wrote in an opinion piece for the Financial Times this week.