(Bloomberg) -- Cocoa futures climbed above $12,000 a ton in New York, reaching a fresh record amid mounting worries over reduced output in top grower Ivory Coast.
The most-active contract rose as much as 7.4% to $12,636 a ton, as fears over Ivory Coast’s production this season have re-emerged with dry weather posing the latest threat to trees. The surge in prices — New York futures have tripled this year — has also pushed companies out of the market, with lower activity further exacerbating price moves.
Current dry conditions in West Africa will mean lower output in February and March, ADM Investor Services analyst Mark Bowman wrote in a note.
Rainfall isn’t forecast in West Africa over the next seven to 10 days and the Harmattan wind, which brings dry and dusty weather from the Sahara desert, “could make matters worse” if the wind is strong, Bowman said.
Production in Ivory Coast, which accounts for more than a third of global output, is expected at 1.9 million tons in the 2024-25 season, according to an average of eight analyst and trader estimates compiled by Bloomberg. That’s compared to a government outlook of about 2.1 million to 2.2 million tons near the start of the season in October. A poorer harvest will complicate efforts to rebuild stockpiles that are trending lower after the prior season’s record deficit.
Inventories in US exchange warehouses, which contain beans that can be delivered against futures contracts, are currently at the lowest levels in more than two decades. Low exchange liquidity may also be contributing to exaggerated price moves, with aggregate open interest continuing to hover near the lowest in more than a decade.
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