(Bloomberg) -- Cocoa is finishing 2024 as the top-performing major commodity, its massive annual gain driven by supply fears and market volatility.
On track for a 172% gain over the past 12 months, cocoa’s tear has been driven by a series of poor harvests in Ivory Coast and Ghana, where the majority of the crop is grown. Dwindling global stockpiles are putting pressure on both buyers and chocolate makers.
Record prices have thinned out liquidity to the lowest in over a decade, as margin calls climbed and positions became increasingly costly to hold. That low futures liquidity added to the wild swings, with prices moving more than a thousand dollars on some of the most volatile trading days.
On Tuesday, futures in New York fluctuated following the largest daily gain since May in the previous session. The London market also moved between small gains and losses.
Weather conditions, including the dry and dusty Harmattan winds, are expected to remain challenging for West Africa’s ongoing cocoa season.
“Harmattan wind speeds should be near average, but the low humidity, abundant sunshine and wind will stress some trees,” analysts at ADM Investor Services wrote in a note on Monday.
Prices of the premium arabica coffee have also soared, gaining around 67% in New York this year to break past the highest levels in more than 40 years on fears that a drought in top supplier Brazil will hurt output next season.
Soy Losses
Meanwhile, soybeans take the spot as the worst-performing major commodity in 2024. Ample production in the US and Brazil, combined with a slowdown in Chinese demand, drove prices down about 24% this year — the biggest annual drop in two decades. US President-elect Donald Trump has also promised to raise tariffs on Chinese imports, potentially setting up soybeans for trade disruptions in the coming year, similar to the dispute during his first term.
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