22.11.2023 – The bulls are melting away like chocolate: the cocoa rally is unstoppable. The old reasons are also the new ones. We provide a brief update.

Strong rally: In New York, futures just reached a new 46-year high before profit-taking set in. Here is the daily chart. The reason for the rally: According to the financial website Barchart.com, the market is worried that current global production will not be enough to prevent a worldwide deficit.


Source: Bernstein Bank GmbH


In addition, the Intercontinental Exchange (ICE) reported an emptying of stocks: reserves in US ports are at their lowest level for two and a half years, according to the commodity exchange in Atlanta.

Problems in Africa
Fittingly, a report from the Ivory Coast: according to the report, the most important producer shipped around 415,000 tons from 1 October to 19 November – a whopping 29% down on the same period last year.
As previously reported here, farmers in Africa are plagued by black pod disease – the black rot was fanned by heavy rainfall. The fungus responsible not only reduces the harvest quantity, but also the quality. This is compounded by the swollen shoot virus, which is transmitted by aphids and leads to the death of the plants. The experts at Tropical Research Services assume that a fifth of the plants in Côte d’Ivoire are infected.
The second largest producer, Ghana, is plagued by similar concerns. Added to this is the fact that fertilizer is becoming scarce. The local regulatory authority had already warned in the summer that farmers would not be able to meet their promised harvest quotas. The 2022/23 harvest will probably be 683,000 tons, a 13-year low – around a quarter below estimates.

Speculative distortion?
However, bulls should be cautious, according to the website “Dairy Processing” – the data situation is completely unclear. Speculative funds are at least partly behind the bull market, which is not fully supported by the fundamentals. For example, an analyst at a major chocolate manufacturer suspects that smuggling to neighboring countries has contributed to the decline in the harvest in the Ivory Coast – which has actually only fallen by 10 percent. Neighboring countries paid the farmers more than the Ivory Coast. The global deficit for the year is probably only around 2 percent, which does not justify the bull run.
In addition, demand is slowly collapsing. For example, cocoa mills in the USA reported an 18 percent drop in processing in the third quarter to date. Halloween was included in this period. According to “Dairy Processing”, the decline in Europe was only 0.9 percent, but Asia reported a drop of 8 percent.
We are therefore curious to see whether the rally will continue – after all, we are approaching the Christmas season, when chocolate is traditionally eaten. Preferably together with a good whisky. With this in mind, Bernstein Bank wishes you successful trades and investments!


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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.