Cocoa prices rose to a record high, sparking new warnings of volatility

Price of the main ingredient of chocolate rose this year, prompting analysts to issue new warnings about extreme price fluctuations.

Cocoa futures Futures for March delivery in New York traded as much as 1% higher at $11,938 a metric ton on Tuesday, setting another record. It has since pared some of those gains, trading at $11,864 at around 8:20 a.m. ET.

The benchmark contract, which hit an all-time intraday high of $11,925 in the previous session, is up more than 180% year to date.

This comes amid renewed concerns about adverse weather conditions and supply shortages in West Africa, home to about 2,000 people Three quarters of cocoa production in the world.

Strategists at Dutch bank ING He said Continued tightening in cocoa and coffee markets, coupled with uncertainty about the weather, means prices are likely to remain volatile over the next year.

The global cocoa market recorded its largest deficit in more than 60 years in the 2023-2024 marketing year, ING said in a research note, citing a research report. Data From the International Cocoa Organization (ICCO). She attributed this shortage to crop failure in Ivory Coast and Ghana, the world’s largest cocoa producers.

“While the outlook for the 2024/25 marketing year looks better, there remain concerns about weather developments in West Africa and what that could mean for production this season,” Warren Patterson, head of commodity strategy at ING, said in a published note. December 11.

He continued: “Forecasts currently indicate that West African production – which represents more than 70% of global output – will rise. However, there are risks to this due to recent bad weather conditions.”

Looking ahead, Patterson said prices were likely to remain historically high next year, which would be necessary to “keep a lid on demand.”

such as cocoa, Their coffee prices It also rises in 2024With analysts recently warning that the recovery of one of the world’s most traded commodities could take years.

Rabobank’s Carlos Mera pointed to cocoa and coffee as commodities of interest to professional traders, though he warned that commodity markets remained “very volatile” and “very risky.”

“(Cocoa) is one of the most obscure commodities, so I wouldn’t advise anyone who doesn’t know it to go there, but it’s definitely one of the most interesting commodities to look at,” Mira told CNBC.Squawk Europe Fund“On Tuesday.

“Then coffee, we have another rally. Coffee is at its highest price since 1977 (and) depending on which decade you look at, it could be a historical record and record prices for Robusta as well… It’s a very interesting situation,” he added.