Cocoa Surges in 2024 Amid Supply Concerns and Low Trading Volume
Cocoa prices soar as supply fears and market volatility drive gains, making it the top commodity of the year.
Cocoa, Ivory Coast, Ghana, Market Volatility, Commodity Prices
New York: Cocoa is wrapping up 2024 as the star of the commodity world. It’s had a wild ride, with prices jumping up by about 175% this year. This surge is mainly due to some pretty rough harvests in Ivory Coast and Ghana, where most of the cocoa comes from. With stockpiles running low, both buyers and chocolate makers are feeling the heat.
Things have gotten so intense that trading has thinned out to levels we haven’t seen in over a decade. Margin calls are on the rise, making it pricier to hold onto positions. This low liquidity has led to some crazy price swings, with changes of over a thousand dollars on particularly wild trading days.
Just the other day, futures in New York were all over the place after a big jump the day before. The London market was also fluctuating between small gains and losses. And it looks like the weather isn’t going to help much either, as West Africa’s cocoa season faces some tough conditions.
Analysts from ADM Investor Services mentioned that while wind speeds should be normal, the low humidity and lots of sunshine could stress out some cocoa trees. Meanwhile, arabica coffee prices have also shot up by around 65% this year, hitting highs not seen in over forty years, thanks to drought worries in Brazil.
On the flip side, soybean prices have dropped, making it the worst-performing major commodity this year. With plenty of production in the US and Brazil and a slowdown in demand from China, soybean prices have taken a hit of about 23% this year.