Cocoa rises on threatened crops

The price of cocoa futures pushed above a two-year high today, as huge rainfalls in Indonesia imperil this year’s crop.

Indonesia is the third largest producer of cocoa in the world, behind Ghana and the Ivory Coast, but its main growing region has collected unseasonable amounts of rain so far this year, with more than double the average rainfall for January falling already this month.

Such vast amounts of precipitation increase the chances of the crop being adversely affected by disease. Heavy rains in 2013 already increased instances of the cocoa pod borer disease, causing the Indonesian Cocoa Association to warn of lower exports in 2014.

The extra rainfall may delay the start of the harvesting season by as much as two months in Sulawesi Island, the main growing region, with the weather possibly interfering with the blossoming process. The quality of beans may also be harmed by overly wet conditions.

The tight supply situation looks likely to coincide with growing demand, driven by higher sales of chocolate: Euromonitor International forecasts global sales will break records this year.

By mid-afternoon in New York, Cocoa futures for March had climbed 0.55% to $2901 a tonne, with a high of 2937, the highest price reached since September 2011.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.