Cocoa is a key export commodity for Ghana
Cocoa fell in New York, as favorable rains were forecast for West African crops and Rabobank said this year’s historic rally has probably peaked.
Futures lost as much as 2.5% to $8,482 a ton. While volatility remains high, trading in the last few days has been relatively subdued compared with big price moves of recent weeks. Cocoa soared to a record above $11,000 in mid-April on the back of severe shortages, before giving up some of those gains.
While prices are unlikely to return to “normal” levels quickly, the peak of the rally has passed, Rabobank analyst Paul Joules said in a report, forecasting prices to head lower.
“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,” he said. Still, “it’s likely that inflated cocoa prices will stick around for the next few years.”
Traders are keeping a close eye on crop conditions in West Africa, where most cocoa is grown, after poor harvests left the world facing a third annual deficit. Some showers are expected for West African nations such as Ivory Coast and Ghana in the next five days, according to forecaster Maxar Technologies Inc.
“The potential rains would aid some crop growth and could slightly improve soil moisture for some areas,” it said.
