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Record-breaking cocoa prices spark market turbulence, experts caution

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The price of cocoa, a key ingredient in chocolate production, has surged in 2024, leading to concerns about extreme price volatility in the industry. The New York Cocoa futures contract with March delivery reached a new record high of $11,938 per metric ton, up over 180% year-to-date. This price surge is attributed to adverse weather conditions and supply shortages in West Africa, the source of three-quarters of the world’s cocoa production.

According to experts at Dutch bank ING, the global cocoa market experienced its largest deficit in over 60 years in the 2023-2024 marketing year due to crop failures in Ivory Coast and Ghana. While there are hopes for better output in the upcoming marketing year, concerns about weather patterns in West Africa could impact production levels. Warren Patterson, head of commodities strategy at ING, emphasized the need for historically elevated prices to manage demand levels in the industry.

In addition to cocoa, coffee prices have also seen a significant increase in 2024, prompting analysts to warn of continued volatility in commodity markets. Carlos Mera from Rabobank highlighted cocoa and coffee as commodities of interest for traders, cautioning that these markets remain “very dangerous” and unpredictable.

The surge in cocoa and coffee prices has implications for consumers and the industry as a whole. Higher prices could lead to increased costs for chocolate producers and potentially impact consumer prices. The industry may need to adapt to the changing market conditions and volatility to ensure stability and sustainability in the long term.

Overall, the current situation in the cocoa market reflects a broader trend of price spikes and volatility in commodity markets. Experts suggest that continued monitoring of weather patterns, supply chains, and demand levels will be essential to navigate these uncertain times. The future outlook for cocoa and coffee prices remains uncertain, with potential long-lasting effects on industry stakeholders and consumers alike.

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