Hot cocoa: prices soar on tight supplies
London and New York cocoa prices are expected to continue rallying, with little end in sight to a bean shortage that has forced plants in top producers Ivory Coast and Ghana to cut or stop processing.
IG financial analyst @AngelineOng looks at the cocoa supply issues that have led to rising prices.
(AI Video Summary)
The cocoa market
The cocoa market is in a state of panic because the main cocoa-producing countries in Ivory Coast and Ghana have been experiencing poor harvests for three years in a row. This is mainly due to disease affecting the cocoa plants. As a result, prices for cocoa have more than doubled in just one year. And unfortunately, it looks like this will continue as there are worries about the next harvest season.
The financial difficulties faced by the top cocoa producers means that they can no longer afford to buy cocoa beans. This has led to concerns about the availability of cocoa supplies. The dealers in the cocoa market are getting increasingly worried about the prices and if there will be enough cocoa to go around.
The New York Cocoa price
In terms of prices, the New York Cocoa price has been steadily rising. It even reached a record-high of $7,000 per tonne last Thursday. And just to add to the excitement, it went up by 8.5% on Friday, reaching $7,600 per tonne. The London Cocoa prices have also been following a similar trend. They rose by almost 7% last Thursday and are currently at around $6.4 per tonne.
The increase in London Cocoa prices has broken through what we call the upward trend line. This means that there has been a significant jump in prices. Investors and traders in the cocoa market are keeping a very close eye on what's happening. Such high prices and low supply of cocoa are expected to have an impact on various industries, especially the chocolate industry, which needs a lot of cocoa as a main ingredient.
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