Cocoa futures have reached their highest level in over seven months, propelled by concerns over production in West Africa, which could impact global supplies in the face of already low inventory levels. The most-active cocoa contract experienced a surge, climbing as much as 5.4% to $10,380 a ton, marking the highest point since April 29.
This rally returns cocoa prices to the highs seen earlier in the year, a rebound driven by challenging weather conditions in the Ivory Coast and Ghana, the leading cocoa producers.
Steve Wateridge, head of research at TRS by Expana, highlighted the recent decline in production outlook, stating, “The outlook for the mid-crops have deteriorated in the past weeks.” He added that the weather conditions over the next three months are crucial in determining if the situation will worsen.
The principal cocoa-growing regions in West Africa are currently facing the Harmattan season, characterized by dryness that can deplete soil moisture and adversely affect the crops.
According to Maxar Technologies (NYSE:) Inc., a weather forecasting company, the lack of soil moisture and minimal rainfall are not conducive to supporting crop growth in the middle of the year. This development has raised concerns among market participants about the potential tightening of cocoa supplies.
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