ACCRA: Cocoa declined to near a two-month low in New York as favourable weather in West Africa eased concerns over severe shortages.
Futures fell as much as 4.2% to below US$7,000 a tonne.
Prices soared to a record above US$11,000 in mid-April as poor African harvests rattled the market, but have since fallen as recent rains in key growing nations eased supply worries, and some analysts said the rally has peaked.
A mix of rain and sun is helping cocoa plants sprout fresh leaves, flowers and cherelles in parts of Africa, where most crops are grown. Still, trees are also attracting insects and farmers are running short of pesticides.
“A shift towards wetter weather over the past few months has improved the prospects for West Africa’s upcoming production, which has pressured cocoa prices,” the Hightower Report said.
Still, it cautioned that there are fears that a lack of fertiliser and pesticide use will hurt output during the 2024 and 2025 season. Prices are still up roughly 70% this year.
The rally has been exacerbated by the long-term underpayment of farmers in key growers, the chief executive officer of ethical chocolate maker Tony’s Chocolonely said last week.
Since prices in the Ivory Coast and neighbouring Ghana are set by the government, habitually at lower levels than the global market, farmers are less incentivised to invest in outdated plantations. — Bloomberg
