Cocoa futures soar to a near-two-year high

Cocoa futures closed up strongly on the day, reaching the highest price in almost two years, amid fears that a surfeit of rainfall could diminish West African harvests.

December Cocoa futures finished up 0.74% in New York, at $2725 per tonne. Earlier in the session, the price traded as high as $2731, the highest price on the most liquid contract since November 2011.

The International Cocoa Organisation has said in the last few days that the world’s cocoa market will be in deficit for the next four years, which has spurred speculators to enter the market. The new season for coca began at the beginning of the month.

An abundance of rain in West Africa, the most important region for cocoa output in the world, has led to fears that supplies may be impacted at a time of increasing consumption. Forecasts are calling for up to 50% more rain than the seasonal average for Ghana and the Ivory Coast in the latter half of October.

Rains are also hindering crushing of a large crop of cocoa in Brazil, one of the world’s largest producers of cocoa.

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