- Cocoa prices have surged globally, surpassing $10,000 per tonne due to unfavorable weather conditions in major cocoa-producing regions, such as West Africa.
- The upward trend extends to coffee prices, driven by strong demand and unfavorable weather conditions in countries such as Brazil and Vietnam, major players in the global coffee market.
- Depending on the technical configuration, there could therefore be opportunities for a long position on one or other of these raw materials.
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Prices have jumped since the start of the year, recently crossing the significant threshold of $10,000 per tonne. Unfavorable weather conditions, especially in major cocoa-producing regions like West Africa, are driving this trend.
If the situation does not improve quickly, cocoa prices will likely continue to rise. A similar upward trend persists for prices, where demand has been strong since last October.
Weather conditions also play an important role, especially in countries like Brazil and Vietnam, which are major players in the global coffee market.
In response to soaring cocoa prices, Ivory Coast, the world’s largest cocoa producer, is expected to approve a 50 percent increase in cocoa prices to 1,500 CFA francs per kilogram (about $2.47) .
Harsh weather conditions in West African countries along the Gulf of Guinea, including Ghana and Cameroon, are exacerbating the situation. This is the third consecutive year of persistent shortages.
Excessive rain leading to fruit rot, coupled with prolonged periods of high temperatures exceeding 30 degrees Celsius and causing drought and reduced yields, are the main reasons for these shortages.
In addition, strong winds carrying dust prevent the proper development of crops by blocking access to sunlight.
Compared to previous decades, current cocoa prices are at record highs, making it difficult to determine a reasonable price ceiling.
Will Brazil and Ecuador also increase their production?
Increased supply from other regions, such as Brazil or Ecuador, could help stabilize the situation and slow down price variations. However, increasing production is a long-term investment, and we may not see the effects for a few years.
Concentrating harvest areas in specific locations increases the risk of permanent shortages. Therefore, we may soon see a rise in prices of basic confectionery products in stores.
Coffee Technical Analysis: Are Prices Ready to Explode?
Extreme weather conditions in Brazil and Vietnam, major coffee producers, are driving up coffee prices. May contracts are up more than 5%, particularly for Robusta coffee, which is up almost 30%.
This increase is due to unfavorable weather conditions which affect coffee production. Currently, coffee prices have been moving sideways since the beginning of the year. Buyers are now testing the upper limit around $200.
If the bulls manage to surpass the indicated limit, which seems to be the target scenario, the next objective will be to reach the clearly defined supply zone around $215.
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Warning : This article is written for informational purposes only; it does not constitute a solicitation, offer, advice or investment recommendation and is not intended to induce the purchase of assets in any manner. I would like to remind you that any type of asset is valued from multiple points of view and carries high risk. Therefore, any investment decision and the associated risk remain the responsibility of the investor.
