Press release: In recent weeks, financial markets have seen spectacular movements not only in stocks or cryptocurrencies, but also in commodities. Developments in the coffee, cocoa and natural gas markets affect not only the global economy, but also the daily lives of consumers. Let’s take a look at what is behind the sharp rise in prices of these three key commodities and how they are expected to evolve in the future.
Coffee: the climate crisis is driving up prices
Coffee, one of the most traded agricultural products, has faced significant price fluctuations in recent months. What are the factors behind this?
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Bad weather
The largest producer of Arabica coffee, Brazil, is currently experiencing one of the worst droughts on record. Dry conditions devastate coffee plants and significantly reduce yields. Likewise, Vietnam, the main producer of the Robusta variety, is suffering, where extreme weather conditions are leading to record prices for this variety. -
Historically low stock
Coffee stocks have reached a 30-year low, putting upward pressure on prices. The combination of reduced production and uncertainty about future harvests only exacerbates the problem. -
Rising production costs
Increased prices of fertilizers, fuel and labor lead to higher production costs. Together, these factors drive up the price of coffee in global markets. 25% above in just one month.
Source: xStation
What can we expect in the near future?
Persistent drought in Brazil and Vietnam is expected to keep upward pressure on coffee prices as poor harvests fail to meet demand. However, if weather conditions improve, price growth could slow or stabilize. But for now, it’s more likely that rising prices will continue for some time, especially if supply remains tight.
Cocoa: growing deficit and El Niño influence
Cocoa prices have increased by more than 20% since the start of the monthmaking it one of the most important products of the year. Several reasons explain this increase:
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Poor harvest in key regions
Ghana and Ivory Coast, which produce nearly two-thirds of the world’s cocoa supplyfaced with an exceptionally poor harvest. Extreme weather conditions caused by the El Niño climate phenomenon, combined with insufficient investment in agriculture, have led to a deterioration in the health of cocoa trees, which are more susceptible to disease. -
Long-term market deficit
The global cocoa market is already in deficit for the third year. This means that the demand for cocoa far exceeds its supply. This situation creates long-term upward pressure on prices, which impacts not only chocolate producers, but also end consumers. -
Rising prices and their impact
The rising price of cocoa increases the cost of producing chocolate and other products, which is gradually reflected in store prices. Consumers can therefore expect an increase in the price of sweets containing cocoa.
Source: xStation
What can we expect in the near future?
Given the persistent market deficit, it is likely that cocoa prices will continue to increase in the short term. Any investment aimed at improving agricultural practices in Ghana and Ivory Coast should only produce results in the medium and long term. So far, the market is suffering from a shortage of cocoa, which will keep prices high. However, even then, it is possible that a sudden improvement in weather conditions and increased investment in agriculture could lead to a stabilization or decline in prices.
Natural gas: cold stimulates demand
The price of natural gas has increased by almost 30% in recent weeks and reached the highest values of last year. What is behind this increase?
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It’s cold in the United States
In the United States, particularly on the East Coast, temperatures are expected to be significantly below normal for this period. According to weather maps, the cold will cover a large part of the territory, forcing households and businesses to increase their energy consumption for heating.
Source: NOAA
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Higher heating demand
Cold weather causes natural gas reservoirs to deplete more quickly. This situation increases demand and pushes up gas prices on global markets. -
Long-term market challenges
In addition to weather conditions, geopolitical and economic factors that affect the distribution of natural gas also contribute to rising prices. The growing demand for LNG (liquefied natural gas) and supply constraints in certain regions are further increasing pressure on the market.
Source: xStation
What can we expect in the near future?
Natural gas prices will likely continue to rise if cold weather lasts longer than normal. However, developments can be quickly modified by unexpected factors, such as higher production or improved temperatures, which could stabilize or even lower prices. However, high volatility is expected to persist in the near term, providing opportunities primarily for short-term traders.
Conclusion
The coffee, cocoa and natural gas markets currently offer unique trading opportunities to investors and traders who are not afraid to trade in a dynamic environment. Going forward, it will be essential to monitor current fundamental and technical indicators and adjust your strategies based on new data. The volatility that characterizes these markets provides opportunities, but also highlights the importance of risk management. Although some price trends may seem very clear at present, commodity markets are often unpredictable and caution should always be exercised.
Whether you decide to make long-term investments or short-term trades, it’s important to be informed and flexible. These markets present not only challenges, but also the opportunity to make attractive profits – for those who know how to read market signals correctly and react quickly.
If you would like to learn more about market movements for these and dozens of other products, or if you are considering taking advantage of the opportunities these markets offer, visit https://www.xtb.com/cz.
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