Cocoa’s price rally may have peaked, according to financial firm Rabobank, which pointed to falling prices for the commodity in New York and forecasted rainfall in West Africa.
Futures for the commodity, which have gone down to about $8,600 a metric ton, have undergone a price correction, the firm said in a note, adding that in April, a shortage propelled cocoa to trade at a record peak of more than $11,461 a metric ton.
Rabobank said that it believes the peak of cocoa’s price rally has passed, and it anticipates prices will be lower in 2024. But even so, it remains bearish, noting that it does not expect a return to “normal” levels for quite some time.
“It’s likely that inflated cocoa prices will stick around for the next few years,” the Dutch banking firm said, adding that it predicts prices during the fourth quarter of the year will average to about $7,000 a metric ton.
“A combination of weakening global demand and production responses, particularly from countries without a fixed farmgate price, will help alleviate the pronounced uncertainty baked into current futures pricing,” Rabobank said.
Nonetheless, West Africa is likely to be on the radar for traders, largely because the region contributes to a significant portion of cocoa crop yields. But challenges linger for the area, as it deals with aging trees, black pod and swollen root viruses, as well as farmers leaving the cocoa industry, Rabobank said.
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