Recent bad weather in West Africa has put cocoa production at risk, driving up the price of the commodity on the London Intercontinental Exchange. Crops were trading for £2,808 per metric ton at the time of writing on the UK stock exchange, not far from the 52-week high of 2,873. Market indicators indicate that the commodity is above the 50-week and 25-week moving averages, and the Stochastic Oscillator and the Relative Strength Index have crossed above the trained signal. Therefore, it is possible that the price will experience a slight decrease in the coming weeks before it continues to rise. Prices are rising due to a competitive cocoa market as less cocoa arrives at ports in the Ivory Coast, the world's top producer, for export this season.
According to the International Cocoa Organization (ICCO), estimates of the global cocoa shortage have ranged from 60,000 metric tons to 142,000 metric tons. The world's largest cocoa exporter, Côte d'Ivoire, experienced below-average rainfall in June, which prevented the drying of harvested cocoa beans. In addition, the price of cocoa has risen due to the imbalance of supply and demand in the industry. With the recovery of the global economy, demand for large companies such as Hershey's and Mondelez has increased. Demand is rising due to a growing middle class in Asian countries such as China and Indonesia. Companies such as Mars, Mondelez, and Hershey have entered into long-term purchase agreements that simplify sales. Climate change will also affect crop production. On the speculative side, the largest cocoa deal in more than a decade has rocked the London Stock Exchange, reminiscent of when a hedge fund manager named "Cofffinger" tried to take over the market. Two years of losses led to a sharp decline in the production of the main chocolate product, bringing the commodity to its lowest level in 40 years. This leaves the tender traders often in short supply, forcing them to buy back the futures when they cannot find enough ships for the buyers when the contract expires. A growing cocoa shortage in recent years has increased stocks, leaving some chocolate makers with no choice but to panic buy, traders said. This caused a lot of pressure, and the July cocoa contract resulted in a premium of £240 per tonne in the next contract.
