Cocoa Futures and the Start of Quarter 2

March was an interesting month for cocoa futures. The market experienced volatility due to a combo of supply chain issues and an increasing concern over future production output. One of the main things to monitor is supply shortages. Cocoa supplies from Ivory Coast and Ghana were strongly impacted by rainy weather conditions causing a delay in the harvest season. A shortage of cocoa beans available in the market pressured futures prices due to this unanticipated weather front.

The global demand for chocolate and cocoa products remained high. Consumption of the soft in Europe and North America have increased as the economy continues to recover post-pandemic. Classic supply and demand issues is the main driver of cocoa prices currently. This equation is a good one for investors to follow and easy to interpret.

As a result of the imbalanced supply and demand, futures prices reached multi-year highs this month. London and New York prices saw a similar move higher. For now cocoa futures has caught the eye of speculative traders and hedge funds and should be closely monitored in the coming months as this opportunity should be a longer-term trend.

Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.