Weather conditions of late, positive for growing new crop, will most likely lead to higher crop yields from West Africa, mainly Côte d’Ivoire and Ghana. That said, cocoa futures' prices saw a drop in August, but both London and New York cocoa futures prices are up over 100% from last year during the same trading period. With such an uptick in prices in 2024, chocolate prices at the store will continue to move higher with the rest of the "food inflation" we have seen all year. So investors and consumers will need to follow corporate earnings in the U.S. stock market to gage the carryover to grocery shelves. My opinion, look for prices on name brands to be up 25%-50% up from last year's holiday season.
Another major factor to the price movement was the change in contract spreads: the difference between September and December contracts in New York grew, while it got tighter in London. Does this mean we will see short-term supply shifts? Some investors are anticipating a bigger drop in futures' prices. If there are delays in shipments from the current cocoa season and supplies enter the market soon, potentially increasing supply and fulfilling demand needs, the price drops will become more realistic. But, the usual factors, crop diseases and climate issues will continue to be a risk to the supply's stability long term.
So, even with the recent "drop" in futures prices, contracts are still trading much higher from last year so higher prices are here to stay at the stores for now.
Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.
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