Posted on 12/25/2008 10:05:53 AM PST by null and void
Cocoa prices on Tuesday surged to a 23-year high as speculative investors poured into the market amid concerns about dwindling supplies from Ivory Coast, by far the world’s largest producer.
Prices for cocoa have risen 70 per cent in the past year, bucking the weakness in overall commodities prices.
The drop in sterling has helped push London-based, sterling-denominated cocoa futures higher, but analysts said the main factor was low supplies.
The International Cocoa Organisation said in its latest monthly report that cocoa bean arrivals until the end of November at ports in Ivory Coast, which provides almost 40 per cent of the world’s supplies, were the lowest in years.
“Only 251,000 tonnes of beans are estimated to have reached the local ports during the first two months of the current season, a level around 40 per cent below average for the four preceding seasons,” it said.
The problem has continued in December – the traditional peak of the harvesting season – because of the impact of cold weather and heavy rains earlier this year, the so-called black pod disease, reduced use of fertiliser because of high prices and a spate of strikes among farmers and customs personnel, traders said. They added that cocoa supplies from Ivory Coast’s west African neighbour Ghana, the second largest producer, were also lower than last season.
As a result, Fortis bank warned that the market faces its third seasonal deficit in a row, further depleting global stocks, which are already at a 20-year low. Inventories are at 39 per cent of global consumption, down from 54 per cent in 2005-06.
In London, Euronext.Liffe cocoa for delivery in May, the market benchmark, on Tuesday jumped to £1,820 a tonne, the highest since October 1985, and 4 per cent higher on the day. New York cocoa futures, denominated in dollars, have risen almost 30 per cent in the past year.
Fortis, nevertheless, said the market was overbought, warning that traders were “fully discounting that, on the production side, everything that can go wrong . . . will indeed go wrong”, without paying attention to lower demand because of the impact of the economic crisis.
Although cocoa consumption has been in the past resilient to economic downturns, traders forecast a drop next year, particularly in the US and Europe.
Just when I thought it was safe to go back into the cocoa; all those great antioxidants and all. Now we have to worry about ANOTHER speculative bubble!
That’s why I stocked up. No way will I go without chocolate for the rest of my days. ;)
How do you manage to stock up and not consume the stock?
Willie Wonka is saddened.
OH, NO, no chocolate!!!
we are doomed.
gonna stock up on M & M’s.......they only melt in your mouth, not in your hands.
Exactly what I thought
I love how the vultures descend into the commodity market, making the existing traders there just shake their head at the incredible prices, and just try to enjoy the great times for a short amount of time, until the market goes bust and they have to clean up the pieces.
After the internet, stock market, oil, and housing bubbles, we have the chocolate bubble. I predict it will ‘pop’ by Valentine’s Day, or Easter, at the latest.
I thought like coffee, cocoa was a New World plant; both are amenable to being grown in Africa unless I'm wrong. I always assumed all our chocolate originated somewhere in S. America, know it's sent overseas for various methods of processing it. Shrug.
Guess I'll buy a couple more cans lol.
Talk about cognitive dissonance. It should be banned. It is deceptive to use that kind of abdominal muscle definition while advertising chocolate. It certainly is unfit for family consumption just before sitting down to Christmas dinner.
Apparently the Mod Squad agrees with you...
Honey, does this chocolate make me look fat?
...which ought to be reason enough for rethinking their position.
Check this out. There are a lot of good reasons to eat chocolate, not that you need one. lol!
*GASP*
:thunk:
I love it when a speculator loses his "investment".
For some reason I've been eating a lot of coco wheats (hadn't eaten it since I was a kid) and oatmeal, only rarely use box cereal, so quick to cook now.
They kind of lost me on this one:
"The drink was a mixture of fermented and roasted cocoa paste, water, chili peppers, cornmeal, and...". That was enough; I didn't click on the link for the rest.
Don’t know who she was, but covered in chocolate and nothing else, holding a strawberry. I had to take an insulin shot just looking at it.
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