Today, futures contracts for cocoa beans, one of the most conservative assets of the financial market, have grown by 1%. Currently, this product is being traded at 2728 US dollars per ton. According to the authoritative portal TradingEconomics, the previous record was reached in October 2016.
The international business newspaper Financial reports that since the beginning of 2018, the price increase for cocoa beans has exceeded 44%.
As usual, the market expectation of this product deficit has become the reason for such a sharp increase. The shortage is caused by the fact that farmers in some areas of Côte d’Ivoire fear that excessive humidity can cause trees diseases and damage crops.
According to the forecasts of the MDA Weather Services, in the beginning of this year Côte d’Ivoire suffered unusual for this season drought. In recent weeks, the situation has changed significantly but, unfortunately, not for the better. Referring to the assumptions of Citigroup and Commerzbank analysts, fears of market participants are related to the harvest of the current agricultural year. At the moment, downpours are knocking unripe beans from the trees.
According to the Food and Agriculture Organization of the United Nations, the West African Cote d’Ivoire continues to be the first in the cocoa beans production for several decades. For example, in 2009, the country grew and prepared for export 1222 thousand tons of the product. In comparison, in the same year other top producers of cocoa beans – Indonesia and Ghana – harvested 800 and 662 thousand tons of the product respectively.
For the country with the population of 24 million people, the export of cocoa beans is an important opportunity to fill the national budget. The threat to the crop will hurt the economy, which is already not stable.
In addition to well-known chocolate and the same name beverage, cocoa beans are widely used in the cosmetic industry and pharmacology. What is more, this product is the basis for animal feed. So, the fizzling agricultural season in the far-away African country can cause a price rise for medicines and even a drop in the stock prices of pharmacological companies.
The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade