The cocoa market saw some big trends develop this month. Cocoa futures' prices ranged from $2,406 to $2,556 for the London market, with an average price of $2,484. For New York cocoa futures, the average price for the March 2023 contract, the front month, was $2,656 per tonne, with moves between $2,571 and $2,778. This range is telling and looks like a bullish move could continue technically.
A key factor influencing the market is the lower cumulative arrivals of cocoa beans at Ivory Coast ports, even with a higher forecasted crop output for the region. Ghana on the other hand, experienced an increase in the volume of purchases of cocoa beans. Globally, the demand for chocolate confectionery products is projected to grow mainly in North America and Pacific Asia - two big purchasers of the product.
The International Cocoa Organization (ICCO) estimated a cocoa deficit of 439,000 metric tonnes for the 2023/24 season, higher than the previous estimate and larger than the deficit in the previous season. The deficit was partly due to lower cocoa production in Ivory Coast, where cocoa shipments to ports were down by 30% compared to the same period last year.
These factors contributed to the move higher this month and was supported by lower production forecasts and smaller inventories in producing countries.
Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.
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